UK ‘may face property crash’

Britain is on the brink of a housing crash, according to a new report.

Figures by the Motley Fool indicate that after deducting expenditure from monthly income the average household "does not have any slack in its budget" as it is left with a shortfall of about £50 a month.

However, with interest rates predicted to rise and many homeowners set to come to the end of their fixed-rate mortgage deals, it was suggested that millions of Britons could become unable to afford secured loan repayments.

Head of personal finance David Kuo said: "With almost no contingency left in their budgets, another rate rise, even a small one, could see many homeowners struggling to meet higher mortgage costs."

The study indicated that homeowners could face a hefty shortfall of about £1,900 a year when their fixed-rate deals expire, as some 15 million low-income households are also set to be affected which may influence attempts at debt management.

As a result Mr Kuo advised homeowners to "act swiftly" and reassess their financial situation.

Meanwhile, ABN Amro economist Dominic White suggested that increasing Secured Loans costs and "unsustainably large" mortgages could set off a worldwide housing crash.

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