The upcoming economic slowdown brings with it the risk of a rise in mortgage delinquencies. However, tighter mortgage lending standards since the financial crisis means borrowers today are more resilient to shocks. That will minimise payment problems from the modest rise in the unemployment rate we expect. And, while house price growth will slow to zero, tight supply will prevent an outright fall in home values and keep levels of negative equity low. Therefore, we expect only a small rise in the delinquency rate, from 4.4% today to around 4.8% by end-2020.
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