FSA sees arrears cases fall as lending increases

Nia Williams

December 15, 2009

The MLAR covers both regulated and non-regulated residential lending to individuals. Regulated loans are secured by a first charge on residential property, where the property is for the use of the borrower or a close relative. Non-regulated lending includes buy to let, second charge and, in some cases, further advances on loans that were originally taken out before regulation came into effect.

The key results for quarter 3 of 2009 are summarised below:

The number of new arrears cases continued to fall, down by 10% in the quarter to 46,000.

New advances totalled £40bn, an increase of 20% on Q2, but remain lower than the £61bn advanced in Q3 2008.

The total value of outstanding loans is now £1,203bn, an increase of 1% compared to a year earlier.

New commitments were much in line with last quarter, at £38bn.

Lending for house purchase has continued to represent an increasing share of new lending, accounting for 57% of new advances and 62% of new commitments in this latest quarter.

Remortgages accounted for 34%, the lowest proportion since the series began in 2007.

The proportion of new lending done at an LTV of more than 90% continued to fall and accounted for less than 2% of new advances in the quarter.

The use of combinations of high LTVs and high income multiples also continued to decrease, down to 1% of new lending in Q3.

The proportion of loans to borrowers with an impaired credit history remained unchanged from last quarter, at a series low of 0.4%.

At the end of Q3 the number of accounts in arrears had fallen to 395,000, a decrease of 2% in the quarter, but 16% higher than in Q3 2008.

The proportion of the residential loan book that is in arrears, and hence not fully performing, was little changed for the third quarter in succession at 3.61%.

The number of new possessions totalled 14,000, a 2.8% increase on Q2, but some 5% below the peak at the start of the year.

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