There’s real concern over arrears says AMI

AMI made the comment in its latest Quarterly Economic Bulletin, looking at the economy, housing and mortgage markets, which was released today.

The Bulletin sets out concerns over current trends in the UK economy and the likelihood of those in long-term mortgage arrears increasing with predicted rises in unemployment and interest rates. AMI believes this will be a supply led inflationary cycle, less susceptible to interest rate influence.

Commenting, Robert Sinclair, director of AMI, said: “There is an undeniable link between unemployment figures and those in long-term arrears. With the prospect of rising unemployment looming, there is now real concern that more people will find themselves in difficulty.

“Intermediaries have played a valuable role in providing consumers with the appropriate mortgage, but changes in consumers’ circumstances have clearly proved costly. The forbearance shown by lenders is to be commended but we are still building problems with the levels of market intervention.

“Property investment meanwhile remains a complicated balance of risks. The expectation of localised sharp price falls on the back of interest rate rises carries a significant short term risk, but a squeezed supply means property should remain an attractive long-term investment and provides a strong market underpin.

“More positively, demand for Buy-to-let lending remains particularly strong and continues to offer investors long-term value. With lenders now returning to the market, greater competition is likely to further improve landlords’ prospects.”