Homeowners should heed warning signs of the harsh fiscal environment looming on the horizon post-Election, according to the latest Property Portfolio Rescue (PPR) Distress Index.
The firm said the number of distressed home sellers contacting PPR in Q1 2010 is more than double that of the pre-credit crunch years, as squeezed household incomes and the rocketing cost of living is causing households to default on mortgage repayments and credit card debts.
Measures outlined in the March Budget, including the first time buyer stamp duty holiday and the small business growth package, have diverted attention from the more severe tax hikes and public spending cuts already in the pipeline, said PPR.
The firm said repossessions will remain at record levels throughout 2010, with 50,000 forecast.
Nick Hopkinson, director of PPR, said: “As if there wasn’t already enough to contend with as more workers are put on part time or reduced hours and the cost of living soars, homeowners can only face tougher times to come when the post-Election Budget exerts its vice-like grip on household finances.
“Worryingly though, Labour’s spin has masked the extent of the impact this will have with a false rosy glow. As a result, homeowners are likely to fail to make the necessary cutbacks and preparations to manage their finances and we are expecting repossessions to remain at record levels at least until the end of the year.”
Hopkinson said the base rate has been homeowners’ only saving grace, yet if inflation continues to rise fuelled by the Quantitative Easing investment bubble, an increase in interest rates will be needed to keep inflation in check before the end of 2010.
Comments
This is the first time I have seen reference to the dangers being presented by Labour's over-optimistic viewpoint. It is good to see. In my household we have been battening-down the hatches for the last year, paying off debt and saving hard. We know interest rates are going up, we know taxes will rise, we know our jobs will continue to be at risk. Our personal austerity means we will not only be able to survive the problems ahead but will hopefully be able to come out better-off by buying assets from others at knock-down prices; people who have continued to believe the profligacy message from the government.