Accountancy firm Moore Stephens has warned that the housing market could be showing early signs of distress as the value of residential mortgages written off by UK banks and building societies increased rapidly.
UK banks and building societies write offs increased by 58% in the last year, jumping from £77m to £122m in the year to 30 June 2018, as house price growth stalled across the country.
Jeremy Willmont, head of restructuring & insolvency at Moore Stephens, said: “Increasing mortgage write-offs could suggest the economy is beginning to display signs of slowing down.”
“The run of good luck that the economy has had since the Brexit vote looks like it could be coming to an end. We may see the number of write-offs rise in the coming months as a result.
“Whatever type of Brexit we end up with, concerns have been raised about the potential impact on the economy. We could see more unemployment and more mortgage repossessions, and the Bank of England has said that a soft Brexit is likely to be followed by more interest rate rises.
“So far the UK housing market has remained relatively stable and that has kept the actual amounts mortgage lenders have written off relatively low as the security for these mortgages has held up.”
In 2009, UK banks were forced to write-off £984m against residential mortgages.