Arrears fall but higher risk lending rises, says Bank of England
The proportion of total loan balances in arrears has continued to fall, reaching 0.99% in the first quarter of this year, according to the Bank of England.
This is the lowest level of arrears since the Bank began collecting the data, and is down to lender flexibility as well continuing low interest rates.
But the figures also highlighted a rise in higher risk lending in the first three months of the year.
The share of mortgage loans with loan to value (LTV) ratios exceeding 90% increased to 4.5%, compared to 3.3% a year earlier. This is its highest since the second quarter of 2017, according to the Bank.
Keith Haggart, managing director of lifetime mortgage provider Responsible Lending, said: “The growth in lending to buyers with less than a 10% deposit points to continuing financial pressure on first-time buyers, whose opportunistic streak means they are likely taking advantage of high LTV mortgages becoming more widely available.”
High income multiples
The Bank also noted that the proportion of high loan to income (LTI) lending was 45% in the first quarter of the year, 0.8 percentage points higher than a year earlier. This lending refers to mortgage loans that are greater than four times the income of an applicant, or greater than three times the annual income for joint buyers.
Overall, the outstanding value of all residential mortgage loans was £1,451 billion, 3.4% higher than a year earlier. Gross mortgage lending was £63.3 billion, 1.4% higher than a year ago.