Londoners and those living in the south-east of England are 55 per cent more likely to struggle to pay their mortgage than those living elsewhere in the UK, new data shows, highlighting the uneven effects of the cost-of-living crisis.
The Financial Conduct Authority said on Friday that 5.9 per cent of the 1.8 million mortgage holders in London and the South East were at “financial risk” by mid-2024. gross income.
The findings highlight the vulnerability of Londoners’ living standards to high housing costs. In the latest data, the average income in the capital is not higher than in other countries when measured after housing costs.
The share of mortgages at risk of default across the UK, excluding London and the South East, is 3.8 per cent, with the lowest rates in the poorest areas where house prices are typically lower, including the north-east of England (2.3 per cent) . , Northern Ireland (2.4 percent) and Scotland (2.8 percent).
The FCA published the figures as it finalizes guidance for banks to support at-risk borrowers, including proactively contacting them about options to help them avoid default. The watchdog said banks reached out to 16.5 million customers for support last year and expected that number to rise to 20.5 million in the next 12 months.
“Our research shows most people are keeping up with their mortgage payments, but some may be experiencing difficulties,” said Sheldon Mills, the FCA’s executive director of consumer and competition, adding that those worried about default should contact their banks sooner rather than later.
The picture of risky mortgages nationwide has increased to 356,000 from the 570,000 predicted last fall. The FCA said the 570,000 figure was based on interest rate expectations in September 2022, when the bank rate is predicted to rise to 5.5 per cent. The latest data is calculated based on expectations that current rates will rise at 4.5 percent.
The FCA’s finding that London households with mortgages are more likely to be financially disadvantaged is in line with a number of recent surveys which show living standards in the capital are no higher than average.
Official figures show that households in London have a higher average after-tax income than any other region or country in the UK, once rent or mortgage costs are deducted, their disposable income level is no higher than average.
Income growth in the capital has also stopped rapidly outpacing other regions of the country, and productivity growth has been below the UK average since the 2008-09 financial crisis.
In a report last week, City Center blamed the slowdown in London’s productivity growth on a disproportionate amount of the UK’s economic weakness since the crash 15 years ago.
The thinker said that the lack of housing in the capital prevented skilled people from moving there, earning the value of output per hour of work.