Apparently not! The mortgage lenders are arrogantly saying how the British system is too robust and well managed to fall into the problems experienced in America. The truth is though even if that is the case Britain has a lot of debt tied up in houses, and outside of houses too. People are listening to the new on TV and reading the papers and some will inevitably be scared of buying. People act in herds and if enough people are scared of buying it could cause the whole system to collapse.
The UK mortgage and debt markets are much more stable than the US, however the property prices are being precariously propped up by an ever weakening ability to make payments. Inflation made prices rise which put the squeeze on young mortgage payers.
The system is robust but it’s unrealistic to say it is infallible. If enough people get scared, a lot more people will follow and that is when we have a problem. A lot of people will be left with negative equity. Negative equity is where you owe more money for your house than what you can sell it for on the market.
Let’s hope for everyone’s sake this confidence lasts!
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