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FSA statistics confirm tight lending criteria

Nia Williams

December 14, 2010

This is according to mortgage lending statistics from the FSA for Quarter 3 2010 which also showed the market to be very similar to Q3 2009.

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.

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

Residential loans to individuals amounted to £1,220bn at the end of Q3, an increase of £10.8bn (0.9%), in the quarter. In Q2 gross loans increased by £2.8bn (+0.2%) and in Q3 2009 the increase was £2.4bn (+0.2%).

In Q3, lending for house purchase accounted for 64% of new advances, the highest percentage in the series, and 61% of new commitments.

The proportion of new lending done at an LTV of more than 90% accounted for just over 2% of new advances for the second successive quarter.

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.

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

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.

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.

Commenting, Paul Diggle, propery economist at Capital Economics, said: Today’s FSA lending data confirm that mortgage lending criteria remained very tight in the third quarter. And while arrears and possessions improved as expected, the full impact of public sector job losses has yet to be felt…

” However, it remains to be seen to what extent low interest rates can offset the renewed deterioration in the labour market as public sector job cuts begin in earnest next year. We suspect a renewed rise in payment problems will be the result.”


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