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| North-south negative equity divide 'widening' | North-south negative equity divide 'widening' |
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| One in seven mortgage holders in north-west England are in negative equity, while in the south-east it is fewer than one in 100, according to a new report. | One in seven mortgage holders in north-west England are in negative equity, while in the south-east it is fewer than one in 100, according to a new report. |
| Ratings agency Standard & Poor's, which issued the research, also claimed that the north/south negative equity divide "is getting wider". | Ratings agency Standard & Poor's, which issued the research, also claimed that the north/south negative equity divide "is getting wider". |
| The report estimates that for the UK as a whole, the proportion of people trapped in properties worth less than their mortgages fell to 4.9% in the first three months of this year, from 5.6% at the end of 2011. | The report estimates that for the UK as a whole, the proportion of people trapped in properties worth less than their mortgages fell to 4.9% in the first three months of this year, from 5.6% at the end of 2011. |
| However, the fortunes of the housing markets of the north and south are very different. The report shows that the proportion of borrowers in the southern regions who were in negative equity fell from 3.3% to 1.5% over the same period, with London and the south-east "leading the way" at 0.9%. By contrast, the figure for the northern regions as a whole edged up to 8.7% from 8.5% last time. | However, the fortunes of the housing markets of the north and south are very different. The report shows that the proportion of borrowers in the southern regions who were in negative equity fell from 3.3% to 1.5% over the same period, with London and the south-east "leading the way" at 0.9%. By contrast, the figure for the northern regions as a whole edged up to 8.7% from 8.5% last time. |
| The report includes a regional breakdown showing wide variations in the rates of negative equity across the country. This shows the north-west as having the highest proportion of these so-called trapped borrowers: 13.5%. In second place was Yorkshire and Humberside (10%), followed by the north-east and Wales (both 8.5%), and the West Midlands (7.3%). | The report includes a regional breakdown showing wide variations in the rates of negative equity across the country. This shows the north-west as having the highest proportion of these so-called trapped borrowers: 13.5%. In second place was Yorkshire and Humberside (10%), followed by the north-east and Wales (both 8.5%), and the West Midlands (7.3%). |
| The figures for the east Midlands and Scotland were 6.2% and 5.4% respectively, followed by the south-west (3.4%) and East Anglia (3.2%). Northern Ireland was excluded because relatively few of the loans in the sample were from this region. | The figures for the east Midlands and Scotland were 6.2% and 5.4% respectively, followed by the south-west (3.4%) and East Anglia (3.2%). Northern Ireland was excluded because relatively few of the loans in the sample were from this region. |
| The S&P report also found that when it came to people who were behind with their mortgage payments, the figures for the north were "substantially higher" than for the south. Around 4.4% of northern mortgage accounts were in arrears in the first three months of this year, compared with 3.5% in the southern regions. | The S&P report also found that when it came to people who were behind with their mortgage payments, the figures for the north were "substantially higher" than for the south. Around 4.4% of northern mortgage accounts were in arrears in the first three months of this year, compared with 3.5% in the southern regions. |
| "Diverging regional house prices mean that the proportion of borrowers with low equity has continued to rise in the north, while it has fallen in southern regions," said the Standard & Poor's report. It added: "Given the buoyant London property market, and further public sector job cuts, which could disproportionately affect the north, we expect that the regional divide in mortgage risk will persist in the coming quarters." | "Diverging regional house prices mean that the proportion of borrowers with low equity has continued to rise in the north, while it has fallen in southern regions," said the Standard & Poor's report. It added: "Given the buoyant London property market, and further public sector job cuts, which could disproportionately affect the north, we expect that the regional divide in mortgage risk will persist in the coming quarters." |
| The researchers said that while northern employment had recently picked up, "we note that part-time jobs account for most of this rise ... Government job cuts, to the tune of 1.2m between 2011 and 2018, are also likely to hit northern regions harder, in our view. Furthermore, given increased foreign demand for 'safe' property assets, we expect the capital's housing market to remain resilient in the near term. Therefore we don't see the regional house price divide closing any time soon." | The researchers said that while northern employment had recently picked up, "we note that part-time jobs account for most of this rise ... Government job cuts, to the tune of 1.2m between 2011 and 2018, are also likely to hit northern regions harder, in our view. Furthermore, given increased foreign demand for 'safe' property assets, we expect the capital's housing market to remain resilient in the near term. Therefore we don't see the regional house price divide closing any time soon." |
| The study covers about 2m mortgage loans backing prime "residential mortgage-backed securities". | The study covers about 2m mortgage loans backing prime "residential mortgage-backed securities". |
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