Unemployment to push mortgage stress upwards in 2009

Rising job losses could see mortgage stress rise to levels higher than those recorded during the interest rate pain of 2008.

According to Fujitsu’s latest Mortgage Stress-O-Meter, the number of households in mortgage stress fell a further 6% in January 2009 to just 635,000. This compares to a peak of 900,000 in August 2008.

Furthermore, Fujitsu has forecast unemployment to rise to five per cent by July 2009 and seven per cent by 2010. As a result, it expects the number of households suffering mortgage stress to blow out to 929,000 by July 2009, of which 302,000 will be in severe stress.

On average, Fujitsu says five per cent of households in severe stress go on to default on their mortgage.

Fujitsu’s mortgage stress figures are determined by surveying a rolling 26,000 consumer sample. Participants are asked a series of structured questions, rather than using the 30 per cent income rule, which it claims is more accurate.