UK ‘at risk of US-style housing slump’

Economic growth, Leverage

UK readers, and others invested in the outlook for the UK housing market, may be particularly interested in the FT this weekend. It devotes 2 prime pages to a detailed analysis by Fitch, the ratings agency, of sub-prime and buy-to-let lending. As we know from the US, these are the most risky types of lending, as borrowers have little ‘skin in the game’ and can most easily walk away from their losses.Until recently, opinion was strongly against the idea that the UK could possibly face similar problems to the US, as lenders had allegedly been ‘more responsible’. Quite how this opinion squared with the universal availability of 125% mortgages (where you could borrow more than the value of the house), and of income multiples of 10 x salary, was always a bit of a puzzle. It was perhaps due to the common desire ‘to believe what one wants to believe’.

But now Fitch has researched the issue, and the facts are available. I find them scary, and can understand why the FT has headlined them. It turns out that most of the UK’s major cities have high concentrations of the risky buy-to-let (BTL) mortgages. Canary Wharf, for example, the centre of London’s financial district, has 28% BTL ownership.

With experts now predicting 40,000 job losses this year in financial services, BTL landlords may find it hard to continue to find sufficient high-paying tenants to rent these apartments. Equally, some towns now have over 10% of sub-prime borrowers. This is also worrying, as Fitch comments that ‘subprime borrowers are 10 times more likely to default than the nation generally’.

Full details of the survey, and an interactive map, are available on this link.


Russian crude supply 'peaking'


Russia is the world’s 2nd largest oil producer. And it has been the main sourc...

Learn more

A tale of two outlooks – part 2


In an early blog last July, I marvelled at the contrast between the then upbeat ...

Learn more
More posts
The New Normal for global industry

The global chemical industry is the third largest sector in the world behind agriculture and energy,...

Debt, deflation, demographics and Brexit set to challenge London house prices

London property websites haven’t used the word “reduced” for many years. But it...

The bill for two decades of doomed stimulus measures is due

The Financial Times kindly made my letter on the risks now associated with central bank stimulus the...

Local supply chains replace global trade as world starts to “do more with less”

Something quite dramatic is happening in the global economy.  Of course, Wall Street analysts still...

Financial markets enter their Convulsion phase

Many companies and investors are still comparing today’s downturn to the 9-month hiccups seen afte...

World risks moving from Denial into Anger as the Paradigm of Loss moves forward

The head of the IMF has warned again on the likely scale of the economic depression ahead: “Gl...

The world has wasted 3 months – there is little time now left to avoid a Covid-19 catastrophe

It is now 3 months since China’s state television broadcast the first news of the Wuhan virus,...

A new recession era to emerge

Contingency planning has become mission-critical. The longer the coronavirus pandemic continues, the...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more