Arrears fears more likely up north

Arrears and Negative equity are more likely for borrowers that live in the north of England rather than the south, according to credit agency Standard and Poor.

The ratings agency has highlighted a growing north-south divide, claiming that its homeowners in the north were 35 percent more likely to be behind by at least 30 days on mortgage repayments in the first three months of 2011, compared with a figure of 25 percent in the last months of 2010.

The difference S&P put down to 'more robust employment trends' in the south, and plans to cut government jobs which will affect the large percentage of public sector workers in the north.

The report's author, credit analyst Mark Boyce, said: 'Given the north's public sector jobs bias we anticipate that unemployment in those regions – and consequently arrears – could escalate. And mortgage risk in the north could diverge even further if the UK's already fragile economic recovery falters.'

S&P data puts the proportion of homes in negative equity, when the value of a home is less than the loan secured on it, at 16.2% in the north-east , and at 2% in the south-east and London. Across the UK as a whole, the proportion of mortgages in negative equity is 5 percent – up 3.6 percent from last summer. Boyce said: 'We believe the sluggish housing market in northern regions over recent quarters may be partly responsible for this rise.'

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