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FSA: Credit impaired lending 0.29% of mortgage market
Mortgage lending to borrowers with a poor credit record has tumbled from just under 5% of the total at the market’s peak in 2006 to 0.29% in Q1 this year.
The market continues to contract, according to figures, after falling from 0.34% in Q2 2011.
This suggests just 3,111 of new mortgage sales were impaired credit in 2011/12 against nearly 900,000 lent in the mainstream market, according to the latest product sales data trend report on mortgages from the FSA.
Following the Mortgage Market Review (MMR) the data also suggests, where under 50% of mortgages were verified in 2008, 70% of remortgagors and 70% of house buyers had their incomes checked in Q1 this year.
Lenders continue to verify higher numbers of applicants classified as risky, so 87% of first-time buyers were income verified as well as 68% of Right to Buy applicants, which is an increase of 8% in just six months.
Sales of capital and interest mortgages rose almost 11% over the last year, where interest-only sales contracted 17.5%. Interest-only mortgages with an unknown payment vehicle continue to hover at 11%, down from 26% in 2007.
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The FSA also suggests capital and interest mortgages are particularly “popular” among Right-to-Buy applicants and first-time buyers with 94% opting for this route.
The FSA said: “These developments partly reflect increased conservatism in the wake of the US mortgage-backed crisis, driving both lenders and borrowers away from lending that relies heavily on equity gains. In addition, several major UK banks have tightened their lending criteria on interest-only.”