The share of mortgage lending over 90% loan to value (LTV) fell between Q2 and Q3, according to the Bank of England’s (BoE) Mortgage Lenders and Administrators Return (MLAR) data.
The share of advances with LTV ratios exceeding 90% decreased on the quarter, by 1.3 percentage points (pp), to 3.5%. This is 2.4pp lower than a year earlier.
The share of mortgages advanced with LTV ratios exceeding 75% increased between Q2 and Q3 to 39.6%, but is still 1.5pp lower than a year earlier.
Overall, the value of new mortgage commitments (lending agreed to be advanced in the coming months) was 6.8% higher than a year earlier at £78.9 billion – the highest level since Q3 2007.
The data also shows that the proportion of lending to borrowers with a high loan to income ratio increased by 5.1pp in Q3 to 48.2%. This is the highest figure since Q1 2007 when the Bank began its MLAR series.
The value of outstanding balances with some arrears fell by 1.2% over the quarter to £13.8 billion, and now accounts for 0.90% of outstanding mortgage balances.
Mark Harris, chief executive of mortgage broker SPF Private Clients said, “The Bank of England figures show a strong lending market, as we have seen on the ground, with new commitments for the coming months some 6.8% higher than a year earlier.
“There is plenty of business in the pipeline which is working its way through as buyers try to take advantage of the stamp duty holiday. As long as they use good advisers – a mortgage broker and a switched-on solicitor – this should be possible, despite some scaremongering that they are already too late.
“The number of borrowers taking out high loan-to-value mortgages fell, with those borrowing more than 90% decreasing by 2.4 percentage points compared with a year ago. This is no real surprise with many lenders pulling back from this market, and it is only just starting to recover, which is good news for first-time buyers in particular.”