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Borrowers with impaired credit history increase in Q3

The proportion of loans to borrowers with an impaired credit history increased slightly in Q3 2010 to 0.44%, data from the Financial Services Authority shows.

But in its latest Mortgage Lending data for the UK the FSA reports that deals of 90% LTV or higher accounted for just over 2% of all loans in Q3.

New lending with a combination of high LTVs and high income multiples continues to account for just over 1% of new lending as it did in Q2.

New advances in the quarter totalled £41bn, 12% higher than in Q2 but much the same as the amount advanced in Q3 2009.

New commitments totalled £38bn, 6% down on the previous quarter but again in line with Q3 last year.

Lending for house purchase accounted for 64% of new advances, the highest percentage in the series, and 61% of new commitments.

Paul Diggle, property economist at Capital Economics, says: “There was some better news for borrowers with a history of impaired credit, who accounted for 0.44% of new mortgages in Q3. Although still far below the 2.73% peak in 2007, that was a two-year high.

He adds: “Surprisingly, the FSA data show that some 20.4% of new mortgages in Q3 were lent without the borrower providing evidence of their income.

“Although down considerably on the 45.5% seen just before the crash, anecdotal evidence would suggest a far lower figure. However, given the FSA’s proposed ban on self-certification mortgages, it may only be a matter of time before these mortgages disappear completely.

“A similar fate may await interest-only mortgages. These accounted for 31.8% of new advances in the third quarter, down from 33.4% in Q2 and over 50% of all mortgage advances in early 2008.”

The total value of outstanding loans is £1,220bn, an increase of less than 1% on last quarter.

The number of new arrears cases has fallen in each of the last seven quarters and was down 2% to 36,600 in Q3.

The total number of accounts in arrears has also continued to fall, each quarter over the past year, decreasing by 2% in Q3 to 346,000.

Consequently, the proportion of the residential loan book that is in arrears, and hence not fully performing, also fell and now stands at 2.97%.

The number of new possessions in the quarter continued to decline, decreasing by 8% to 9,145, the lowest figure since the end of 2007.

Arrears totalling £44m on 16,184 accounts were capitalised in Q3.

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JASON BERRY, HEAD OF DISTRIBUTION AND STRATEGY, SAFE & SECURE

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  • Steven Balmer 14th December 2010 at 6:19 pm

    I really wish commentators would appreciate the difference between fast track and self certification. I imagine that fast track accounts for all non verified mortgage applications which have an almost non existent repossession rate anyway. I also think Aldermore is likely to have made a difference with regards to Near Prime lending which unfortunately is not available in Scotland or Northern Ireland. Lenders refusing to lend in these countries simply means similar applicants out with England and Wales are paying a premium due to geography. Clients needs have not changed and it seems grossly unfair these limitations are costing some UK taxpayers much more for their mortgages. This bias should be looked at and discrimination of this kind put to an end. The impact this has had on the economy in Northern Ireland is very plain to see and the attitude of “I’m alright Jack…” should be addressed with urgency. Fair play to all!!