Lending at higher LTVs remains thin on the ground, says the FSA
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Lenders are still failing to offer borrowers high LTV mortgages, latest data from the Financial Services Authority reveals.
The proportion of lending done at more than 90% LTV accounted for less than 2% of new advances for the third successive quarter in Q1 2010, down from a high of 15% in 2007.
New lending with a combination of high LTVs and high income multiples also accounted for less than 1% of new lending in Q1.
Paul Diggle, property economist at Capital Economics, says there was much talk at the start of the year about the increased availability of mortgages at high LTVs but the FSA’s figures suggest these loans have not been forthcoming.
He says: “Whether this is because lenders are turning applicants down based on credit worthiness and income security, or whether potential borrowers are being deterred from taking on debt due to uncertainty in the labour market and economy is unclear.”
The proportion of loans to borrowers with impaired credit histories was little changed for the third successive quarter, at 0.35%.
But the figures reveal that repossessions fell 11% in Q1 to their lowest level for two years.
The number of new repossessions in the quarter fell to 10,452 from 11,736, representing one repossession case for every 1,471 loan accounts.
For the previous three quarters the total number of accounts in arrears had also declined, and this figure fell again by some 4% in Q1 to 362,000.
The proportion of the residential loan book in arrears, and hence not fully performing, also fell for the third successive quarter to 3.23%.
The number of new cases in arrears continued the downward trend that began last year, with a further fall to 40,500.
The total value of outstanding loans was £1,206bn, virtually unchanged from the previous quarter.
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