Last month the BOE said that UK households remain highly indebted and ordered a review of risks to banks from rate increases. The review is to be concluded in September.
This is going to be a very big issue when rates start to go up. There were some ridiculous mortgages taken when the world was a sunnier place and debt grew on tress. People were fighting to get on the property boom and were taking 100% LTV’s and given mortgages at silly multiples to wages.
They are now sitting on properties which have fallen in value and are struggling. A tiny 0.25% rise could tip a lot of people over the cliff.
