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Bad credit mortgages up 195 per cent in four years

Written by: Shekina Tuahene
The North West is home to the biggest rise in impaired credit mortgages sold over the last four years

The number of mortgages sold to people with impaired credit increased by 195 per cent from 2,520 sales in 2014 to 7,427 in 2018.

The Financial Conduct Authority’s (FCA) mortgage product sales data showed the North West took the largest share of sales to borrowers with impaired credit, accounting for 14 per cent of all sales during the period. Northern Ireland accounted for just one per cent with 23 sales.

The North West also saw the largest increase in these sales from 2017 to 2018, up 47 per cent to 1,072 sales. Between 2014 and 2018; this represented a 317 per cent rise from 2014’s figure of 257 sales.

Despite the growth, mortgages sold to people with impaired credit made up just 0.6 per cent of all sales in 2018.

Mortgage sales up

Overall, 1.22 million mortgages were sold in the UK last year, a five per cent increase on the 1.16 million mortgages sold in 2017.

The South West completed the most mortgage sales in 2018, accounting for 13 per cent with 157,661 sold.
The North West saw the biggest uptick of seven per cent from 126,993 sales in 2017 to 135,756 in 2018, accounting for one in 10 UK mortgages sold. The region also had the hugest increase in sales overall between 2014 and 2018, up 34 per cent from 100,970 to 135,756.

Loan amounts have also risen over time, with higher loan values occurring in London which accounted for 53 per cent of loans over £500,001 and 29 per cent of loans between £250,001 and £500,000.

For sales in the £120,001-£250,000 loan value band, the North West saw the largest increase of nine per cent from 51,283 in 2017 to 55,967 in 2018.

Between 2014 and 2018, London had the steepest decline of sales in this band down 23 per cent. This represented a drop of 12,762 sales as 43,809 sales were completed in 2018 compared with 2014’s 56,571 sales.

The South West had the largest concentration of sales in this band, from 2014 to 2018 with sales for 2018 at 82,237.

High LTVs up

Between 2014 and 2018, UK mortgage sales were mainly concentrated in the 50 to 75 per cent loan to value (LTV) band.

The North West saw 12,554 sales in the 90 to 95 per cent LTV band in 2018, taking up the bulk of these mortgages.

Scotland had the highest increase of sales with LTVs of 90 to 95 per cent, up six per cent from 9,992 in 2017 to 10,607 in 2018. The region also had the largest growth between 2014 and 2018 in this band with a 120 per cent growth from 4,817 in 2014 to 10,607 in 2018.

The North West saw the biggest increase of seven per cent for sales in the 85 to 90 per cent band from 22,312 in 2017 to 23,888 in 2018.

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