The UK maps that show where an interest rate rise would hit mortgage holders the hardest

Savills look at loan to value and loan to income ratios across the country to work out where mortgage holders were most at risk

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The Independent Online

Mortgage-holders in Newham, Crawley and Barking are among the most at risk if the Treasury decides to increase interest rates, according to data released by the estate agent Savills.

Savills said that mortgage-holders in Dagenham, Tower Hamlets, Harlow, Worcester, Watford and Slough were most exposed should the interest rates rise, thanks to a potent mix of buyers overstretching themselves compared to their income or taking on a lot of debt relative to the value of their home. 

Savills look at loan to value and loan to income ratios across the country to work out where mortgage holders were most at risk.

It found that in Burnley, the average outstanding loan to value among owner occupiers with a mortgage is 88 per cent, while in Camden it is just 15 per cent.

That's partly because the value of housing has increased so quickly in parts of London.

Darker green areas have borrowed more compared to the value of their home

Highly indebted areas, where borrowers have high mortgages considering the value of their homes, are found in Worcester, Peterborough and less affluent urban markets in North England and Wales.

Another way of looking at the riskiness of household debt is to compare how much householders have borrowed relative to what they earn.

Even though houses have appreciated faster in London, mortgage holders will be hit much harder should interest rates rise, because they have borrowed more compared to their income than in other parts of the country.

Darker blue areas have borrowed more compared to how much they earn

Younger owners may be particularly hard hit.

“The capital will be more constrained by mortgage market review and increased interest rate rises,” said Lucien Cook, head of Savills UK residential research. “This will particularly affect younger owner occupiers, who are relatively new to the market and have stretched themselves on higher loan to incomes.”

Interest rates are expected to stay at historic lows of 0.5 per cent in the UK until 2017. 

The UK was expected to follow the lead of the US Federal Reserve after it raised rates in December

But collapsing oil prices, fears over the slowing of the Chinese economy and sluggish pay growth have all warned the Bank of England off raising rates this year.

Savills previously warned that delaying interest rate rises for too long could allow house prices to grow at an unsustainable pace.

“If rates remain too low for too long house prices could rise to a level that would become unsustainable if rates were subsequently to rise sharply,” Cook said.