The Bank of England has published its latest Mortgage Lenders and Administrators Statistics which indicate that arrears figures have decreased slightly. The proportion of total loan balances in arrears has continued to decrease, reaching 0.99%, the lowest since the series began in 2007

The figures indicated that the outstanding value of all residential mortgage loans was £1,451 billion in 2019 Q1, 3.4% higher than a year earlier, whilst the value of gross mortgage advances was £63.3 billion in 2019 Q1, 1.4% higher than a year ago.

The value of new mortgage commitments (lending agreed to be advanced in the coming months) was £63.8 billion, 4.5% higher than a year earlier. The share of mortgage loans with loan to value (LTV) ratios exceeding 90% increased to 4.5% in 2019 Q1, compared to 3.3% a year earlier. This is its highest since 2017.

Whilst The proportion of high loan to income (LTI) lending (loans greater than four times the value of annual income for a single buyer or greater than three times the annual income for joint buyers) was 45.0% in Q1, 0.8 percentage points (pp) higher than a year earlier the share of lending for buy to let (BTL) purposes (including house purchase, remortgage and further advance) was 14.0% in 2019 Q1, marginally lower than a year earlier

Mark Pilling, Spicerhaart Corporate Sales Managing Director, said “The latest Mortgage Lenders and Administrators Statistics reveal that the proportion of total loans in arrears fell slightly on the quarter to £14.4bn while the proportion of total loan balances in arrears decreased from 1.0%  – which it has held for some time – to 0.99%; the lowest since the series began in 2007.”

“It is good news that arrears remain historically low – and in fact are continuing to fall –  but these statistics do not necessarily mean that people are no longer experiencing financial difficulties. In fact, it is more a sign that lenders are doing all they can to help borrowers who are struggling to avoid arrears and repossessions.”

“Another thing to note from these stats is that borrowers are taking out bigger and bigger loans. The number of mortgages with LTVs above 90% increased by 4.5% (compared to 3.3% a year earlier) the highest since 2017, while the proportion of lending to borrowers with high loan to income ratios (more than four times their salary for single incomes and three times for joint) rose to 45%.

“This suggests that many borrowers are stretching themselves too thin, and if and when rates do rise, they may start to struggle.

“It is therefore important that lenders to look at all the cases on their books and if they have concerns about borrowers who are already struggling or are likely to down the line, to speak to them sooner rather than later in order to look at possible options. We work closely with lenders to manage their arrears and repossessions, to find solutions that best suit them and their customers.”