The north bears the brunt of rising UK mortgage arrears

by Aaron Strutt

Apr 13 2012

Mortgage arrears are rising across the UK, but borrowers in the north continue to struggle more than in the south, according to Standard & Poor's latest research.

Using data from quarter four in 2011, data from a sample of 1.5 million mortgage loans backing UK residential mortgage-backed securities, S&P found that mortgage borrowers in the north of the country are about 30% more likely to be in arrears than those in the south.

If S&P's findings are representative of the UK mortgage market as a whole, this would mean that the number of borrowers in negative equity has grown from 403,200 in the second quarter of 2010 to 627,200 in the last quarter of 2011.

Mark Boyce, a credit analyst at the ratings agency, said: “Our analysis also found that the equity positions of UK mortgage borrowers have deteriorated, and we estimate that about 5.6% were in negative equity in Q4 2011, up from 3.6% in Q2 2010.”

“As with arrears, we see a clear divergence between the north and south. At end-2011, about 8.5% of borrowers in the northern regions were in negative equity-that is, their mortgage loan balance exceeded the value of the securing property, up from 6.0%.

“Only 3.3% of southern borrowers were in this position in Q4 2011, compared with 1.5% in Q2 2010.”

April 13, 2012