Number of 'risky' mortgages up by 15%

9 July 2018
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The number of high-risk mortgages in the UK jumped by 15% last year, with 101,380 approved by banks, according to analysis of mortgage data.

The Bank of England says mortgages should be considered high-risk if they are lent at 4.5 times or more of an applicant’s salary.

Peer-to-peer property lending platform Lendy reveals that Croydon is the area with the most high-risk mortgage lending, with 463 risky mortgages taken out in 2017 – up 11% from 419 the previous year. This compares with a UK average of just 39 risky mortgages per area last year. Croydon was also the only area in south London to see house prices rise in the year to February, according to data from Rightmove.

All top five areas for high-risk mortgages were in London, with Walthamstow coming second with 421 ‘risky’ mortgages, followed by Wandsworth (363), Streatham (322), and Tooting (319).

Lendy says that the rise in the number of ‘high-risk mortgages to would-be homeowners means that there is less funding available to property developers to fund new housing.

Liam Brooke, chief executive of Lendy, comments: “Banks are still piling into the owner-occupier market and choosing to lend more to risky mortgage borrowers rather than property developers. If just some of this lending went to well-run property developers, it would get more spades in the ground, more houses built and start to alleviate the housing crisis.”

Top 10 areas for risky mortgages in the UK

RankAreaNumber of high-risk mortgages
1Croydon463
2Walthamstow421
3Wandsworth363
4Streatham322
5Tooting319
6Brighton313
7Hove296
8Battersea296
9Farnborough294
10Wimbledon276

Source: Lendy, June 2018

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