This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/6922109.stm

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
UK housing market is 'overvalued' UK housing market is 'overvalued'
(1 day later)
UK house prices are at least 20% overvalued compared with their long term average, according to credit rating agency Fitch.UK house prices are at least 20% overvalued compared with their long term average, according to credit rating agency Fitch.
Fitch, which judges how risky debt is, looked at how house prices have raced away from incomes over the past decade.Fitch, which judges how risky debt is, looked at how house prices have raced away from incomes over the past decade.
High levels of debt make the UK economy one of the most vulnerable in the world to higher interest rates, it added.High levels of debt make the UK economy one of the most vulnerable in the world to higher interest rates, it added.
Out of 16 countries examined, the UK economy was the third most sensitive to higher interest rates, Fitch said.Out of 16 countries examined, the UK economy was the third most sensitive to higher interest rates, Fitch said.
'Adverse shocks''Adverse shocks'
Fitch looked at a combination of economic indicators to see where house prices were overvalued and which economies were at risk if interest rates rose.Fitch looked at a combination of economic indicators to see where house prices were overvalued and which economies were at risk if interest rates rose.
MOST VULNERABLE COUNTRIES New ZealandDenmarkUKNorwaySwedenSource: FitchMOST VULNERABLE COUNTRIES New ZealandDenmarkUKNorwaySwedenSource: Fitch
In addition, the group looked at what type of mortgage dominated the market.In addition, the group looked at what type of mortgage dominated the market.
Countries where variable rate mortgages are in vogue, such as the UK, would feel a greater impact from higher interest rates, Fitch said.Countries where variable rate mortgages are in vogue, such as the UK, would feel a greater impact from higher interest rates, Fitch said.
New Zealand and Denmark, which have both seen house price booms and increasing levels of personal debt, were the two most vulnerable to higher rates, followed by the UK.New Zealand and Denmark, which have both seen house price booms and increasing levels of personal debt, were the two most vulnerable to higher rates, followed by the UK.
At the other end of the scale, consumers in Italy, Germany and Japan were the least likely to suffer if interest rates rose and debt became harder to manage.At the other end of the scale, consumers in Italy, Germany and Japan were the least likely to suffer if interest rates rose and debt became harder to manage.
This is because consumers in these countries have not seen house prices or debt race away from incomes to the same extent as the UK. Mortgage lending is holding up well in the face of higher interest rates and mortgage approvals are still robust George Buckley, Deutsche BankThis is because consumers in these countries have not seen house prices or debt race away from incomes to the same extent as the UK. Mortgage lending is holding up well in the face of higher interest rates and mortgage approvals are still robust George Buckley, Deutsche Bank
Borrowing upBorrowing up
Meanwhile, the Bank of England (BoE) said on Monday that UK mortgage lending had picked up sharply in June, indicating continued housing market growth.Meanwhile, the Bank of England (BoE) said on Monday that UK mortgage lending had picked up sharply in June, indicating continued housing market growth.
Total mortgage lending rose by £9.6bn in June, up from £8.7bn in May.Total mortgage lending rose by £9.6bn in June, up from £8.7bn in May.
The number of mortgage approved was the same in June as in May, with 114,000 new home loans given the go ahead. The number of mortgages approved was the same in June as in May, with 114,000 new home loans given the go ahead.
The lending figures were stronger then most analysts expected.The lending figures were stronger then most analysts expected.
"Mortgage lending is holding up well in the face of higher interest rates and mortgage approvals are still robust," George Buckley an analyst at Deutsche Bank said."Mortgage lending is holding up well in the face of higher interest rates and mortgage approvals are still robust," George Buckley an analyst at Deutsche Bank said.
"We expect some weakening in these numbers towards the end of the year, but for now the market seems to be holding up well," he added."We expect some weakening in these numbers towards the end of the year, but for now the market seems to be holding up well," he added.