Ratings agency Fitch claims that UK house prices could be as much as 20% overvalued compared with their long-term average.
The Fitch report, published today, also found that the UK, along with New Zealand and Denmark, was extremely vulnerable to interest rate rises due to weakening property prices and rising interest rates. The Fitch report considered a variety of economic indicators to see where house prices are overvalued and considered the type of mortgages that are most popular. In the UK, variable rate deals are the most widely used, which increases the risk of rising interest rates. According to Fitch, incomes have not kept up with house prices and this risks reducing demand for houses in the long term...
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