Level of ‘risky lending’ by the banks to home buyers hits new high

The level of high loan-to-value lending has hit the highest rate since the financial crisis.

Bank of England data shows the share of mortgages advanced in the third quarter of 2019 with LTVs exceeding 90% increased to 5.9%.

This is the highest share since the fourth quarter of 2008.

The share of mortgages advanced with an LTV of more than 75% also increased by 3.1 percentage points to 41.1%, the highest since the third quarter of 2018.

The figures also suggest an increase in mortgage lending, with commitments to be advanced in the coming months 1.1% higher than a year earlier, at £73.8bn

Meanwhile, just 0.92% of mortgage balances were found to be in arrears, an all-time low.

Mark Pilling, managing director of Spicerhaart Corporate Sales, said: “The arrears figures from Bank of England are encouraging, especially given the current political situation.

“It just shows that no matter what is going on in Westminster, people are looking after their own affairs and trying to stay on top of things.

“The trend for higher loan-to-value mortgages is always a concern, as we head into uncharted waters next year.

“There is no way, at the moment, to predict what will happen in the economy when, and if, Brexit is completed, and there is a real risk that interest rates will rise. With this in mind, it is more important than ever for lenders to ensure long-term affordability.

“We do not want to find ourselves back in a situation where repossessions begin to rise and people lose their homes.”


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