Just 2% of new lending over 90% LTV
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Figures published by the Financial Services Authority show the proportion of new lending done at an LTV of more than 90% accounted for just over 2% of new advances in Q2 2010.
The proportion of new lending that is at a high LTV had been on a downward trend since mid-2007, when it accounted for 14.8% of lending.
It has increased slightly in each of the last two quarters though and this quarter the proportion was 2.1% compared with 1.6% in Q1.
The proportion of new lending done at a combination of high LTV and high income multiple - more than 3.5 x single or 2.75 x joint income, also increased slightly to 1.2%, but remains well below the 9.2% it accounted for in Q2 2007.
Firms report to the FSA each quarter on their residential mortgage lending activities using the Mortgage Lending & Administration Return.
Its latest results show the total value of outstanding loans is now £1,209bn, little changed from Q1, new advances in the quarter totalled £36bn, 14% higher than in Q1, and 8% higher than the amount advanced in Q2 2009.
New commitments totalled £41bn, 20% up on the previous quarter and the share of lending for house purchase recovered from the dip last quarter, to account for 61% of new advances and 63% of new commitments in Q2.
In Q2, the value of new commitments for house purchase was the highest figure for over two years, at £25.7bn, being some 29% up on Q1 and 20% higher than in Q2 last year.
New commitments for remortgaging also increased, for the second successive quarter, from the low of £9.6bn in Q4 2009 to £11.6bn in Q2 but accounted a slightly lower proportion of all commitments this quarter, 29%.
The proportion of loans to borrowers with an impaired credit history has been unchanged for the past year and now stands at 0.33%.
Meanwhile, the number of new arrears cases has been on a downward trend for the past six quarters, with a further reduction in the number in Q2 to 37,200, -8%.
The total number of accounts in arrears has also continued to fall, for the fourth successive quarter, with a decrease of 3% in the latest quarter to 351,000.
Consequently, the proportion of the residential loan book that is in arrears, and hence not fully performing, also fell and now stands at 3.11% number of new possessions in the quarter continued to decline, decreasing by 5% to 10,000, the lowest figure for over two years.
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Readers' comments (1)
Tom IFA | 14 Sep 2010 1:12 pm
Sorry to be stating the obvious but these are the basic facts of life.
The only reason why next time borrowers are well under 90% LTV is rising property prices. This is why we encourage our kids (rightly or wrongly) to get on the housing LADDER asap and do do the same as us parents stop spending money and enjoying ourselves and start paying a mortgage!
Once we are in our house's and working to survive the onslought of bills and family demands saving to put more money down next time we have to move is impossible for most My house size and mortgage life has only happened because of house price inflation! FTB must be allowed to buy with a minimum deposit - no not 125% LTV but 90% - 95% the same as all us 35 year old + people sitting pretty and telling our kids to save £50,000 to buy a small £200,000 flat within 35 miles in all directions of where I live!
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