Mazars: South London hotspot for high-risk mortgages

Jake Carter

October 18, 2021


South London is the UK’s hotspot for high-risk mortgages, with more than 6,300 written at 4.5 times the borrower’s earnings or higher in the past year, according to research by Mazars.

Bank of England guidance outlined that mortgages are considered ‘high-risk’ if they are lent at 4.5 times the applicant’s salary or above.

Mazars said that, traditionally, South West London has been home to the highest concentration of risky mortgages; now that risk is expanding to South East London as more young professionals look to buy homes in ‘up and coming’ areas, such as Croydon (387) and Streatham (356).

Wandsworth was the area with the most risky mortgages – with 426 written at 4.5 times the borrower’s earnings in the past year, a 21% increase on last year.

This places it first out of 2,763 areas of the UK for risky mortgages. Wandsworth was joined in the top 10 by five other South London areas – Croydon, Streatham, Tooting, Battersea and Wimbledon.

Mazars said that the number of high-risk mortgages in South London has risen as the area continues to see money pumped in to redevelopment projects such as the Northern line extension, the £9bn Battersea Power Station redevelopment and the redevelopment of Nine Elms including Embassy Gardens.

As a whole, the UK has seen a rise in the total number of high-risk mortgages given out, with 97,221 written in 2020/21, up from 96,720 in 2019/20.

In the first quarter of 2021 high-risk mortgages made up 12.6% of all mortgages up from 11% five years ago.

Paul Rouse, partner at Mazars, said: “South London has long been a favourite area for mortgage lenders.

“The stamp duty holiday and the boom in house purchases has led to some lenders writing more lending than ever before in the area.

“However the [Prudential Regulation Authority (PRA)] has a limit on how much risky-mortgage lending banks can do in total for a reason.

“But with interest rates expected to remain steady some lenders continue to feel comfortable offering mortgages at high earning multiples.”

Sign up to our daily email