The proportion of households paying more than 20% of their gross salaries on mortgages and other debts is now higher than it was in 1991, amid the last housing crash, says the latest Bank of England Quarterly Bulletin. Daily Telegraph Financial Times
It also showed that the proportion of households facing trouble maintaining payments is at the highest level for almost 15 years.
The rise in the number of households struggling to pay their debts is small but likely to fuel concerns about the ability of the 1.4m home owners on fixed rates facing a sharp jump in repayments when their deals expire.
However, the Bank indicated that it was reassuring that, meanwhile, the number of people reporting problems paying their mortgage was still lower than in 1991.
Meanwhile, the flow of money into the world of commercial property has turned negative for the first time in many years as investors flee the troubled sector, the report shows.
The Bank raises particular alarm over the state of the office building market. It reports that returns from commercial property have dived into negative territory – and warns that losses from the sector could worsen even more in the coming months.
It said one of the biggest worries facing the markets was the knock-on effect of a crash in the commercial property sector.
'A particular concern among contacts related to the position of funds which invested exclusively in commercial property,' it said. 'UK property funds recorded net redemptions in October from both retail and institutional investors. In the same month, commercial property prices fell sharply in the United Kingdom and returns on commercial property slowed significantly. To the extent that commercial property funds became forced sellers of their assets, this could potentially further undermine returns.'