66.3%

[PropEx]

I read that that is the average percentage of salary that first time buyers pay on their mortgage in London! How is that sustainable, especially when interest rates go up? And maybe more importantly, what kind of life do these people live? After paying bills and buying food, travel expenses etc do they even have money left to have the odd pint at the weekend? It is more of an existence than a life.

 

[propertyvalues]

It's not sustainable. Period. A high mortgage as a % of income average, generally signals wider economic implications and should be seen as a leading indicator of problems to come. More concerning however is the banking sector exposure to any rise in non performing loans. As of yet, this is not a problem in the UK. However, this can be attributed to low interest rates. Any future upward movement in rates will see a rise in non performing loans. Only then will we know just how exposed investors really are.