The latest Mortgage Lenders and Administrators Statistics from the Bank of England show that the proportion of total loan balances with some arrears has fallen to its lowest level in 12 years.

The Mortgage Lenders and Administrators Return (MLAR) is a quarterly statistical release aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators. The findings also show that:

  • The outstanding value of all residential mortgage loans was £1,461 billion in 2019 Q2, 3.1% higher than a year earlier
  • The value of gross mortgage advances was £66.1 billion in 2019 Q2, 1.0% lower than a year ago
  • The value of new mortgage commitments (lending agreed to be advanced in the coming months) was broadly unchanged compared to a year earlier, at £73.4 billion
  • The share of mortgages advanced in Q2 with loan to value (LTV) ratios exceeding 90% was 5.5%, the highest since 2008 Q4
  • The proportion of lending at high loan to income (LTI) ratios (loans greater than four times the value of annual income for a single borrower or greater than three times annual income for joint borrowers) was 46.1% in 2019 Q2, 0.7 percentage points (pp) higher than a year earlier
  • The share of gross mortgage lending for buy-to-let purposes (covering house purchase, remortgage and further advance) was 13.1%, in line with a year earlier
  • Lending to owner-occupiers for house purchase accounted for 50.5% of total gross mortgage advances in Q2. Of this, 21.3% was to first-time buyers, which is consistent with a year earlier. The share of lending to home movers increased marginally in the year to 29.2%

Mark Pilling, is MD at Spicerhaart Corporate Sales said: “The latest Mortgage Lenders and Administrators Statistics reveal that the value of outstanding balances with arrears fell by 1.7% on the quarter to £14.2bn, while the proportion of total loan balances in arrears decreased again, falling from 0.99% to 0.97% which is the lowest since the series began in 2007.”

“It is obviously great news that arrears are low and still falling, but that does not necessarily mean that people are not experiencing financial difficulties. Instead, what I think we can take form these figures is that lenders are continuing to do all they can to help borrowers who are struggling, to ensure that repossession is always the last option.

“Another more worrying trend that we can see from these stats is that the number of mortgages with higher LTVs is continuing to increase. The number of mortgages with LTVs above 90% increased quite significantly this quarter, from 5.21% of all mortgages to 6.31%, while those borrowing more than three times their incomes (both single incomes and joint) has also increased.

“This suggests that some borrowers may be stretching themselves too thin, and if rates do rise, they may start to struggle with their repayments. ONS figures released last month revealed house prices fell in the South West for the first time since 2009, so those with bigger loans which have been taken out recently may also find themselves in negative equity if this trend continues and spreads throughout the rest of the country.

“In uncertain times as these, it is really important that lenders continue to focus on speaking to borrowers who are struggling and ensuring that appropriate support and signposting is available. We work closely with lenders to assist in providing a range of solutions that ensures a borrower in difficulty has access to various tools that can assist them in finding a positive outcome to the difficult situation that they find themselves in.”