英國市場HLTV（High Loan-to-Value）房屋貸款風險分析

Abstract

Overview

Introduction

High LTV mortgage loans have become commonplace in recent years, yet they merit concern because of the risks they pose to both lenders and mortgagors.

Scope

• Provides data on the extent to which high LTV loans account for in the mortgage market and for its major lenders.
• Discusses the benefits and risks of high LTV mortgages for both customers and lenders.
• Provides insight into how lenders can reduce their exposure to potential future problems.

Report Highlights

To accommodate customers challenged by a lack of affordability, as well as to remain competitive with regards to customer acquisition, lenders have adapted their offering by raising the LTV on their mortgages so that FTBs or young movers can borrow with them. The proliferation of 100%+ LTV mortgages is just one case in point.

While the vast majority of high LTV mortgages are offered by lenders that have fully checked that the applicant(s) can afford it, they still expose borrowers to a greater extent than traditional mortgages with a lower LTV. Indeed, customers are exposed to the possibility of negative equity, a Higher Lending Charge, and higher interest rates.

While high LTV mortgage borrowers are already exposed to risk, their exposure becomes greater in an uncertain economy or in a recession. While no official data is available, there is anecdotal evidence that mortgagors with high LTVs are more likely to suffer difficulties with monthly repayments, go into arrears and suffer repossessions more often.

Reasons to Purchase

• Evaluate the risk of high LTV mortgages for your business, as well as in comparison to other lenders.
• Understand what steps your business can take to reduce risk in the future.
• Learn how lenders are reacting to a more difficult economic climate with regards to high LTV mortgages.

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • High LTV mortgages have become popular as house prices have grown
    • Datamonitor defines high LTV mortgages as mortgage products with a 90% LTV or above
      • Some specialist mortgages above 85% LTV, however, can also be considered high LTV mortgages
    • First-time buyers and others have been priced out as house prices have risen
    • To cater for customers and remain competitive, lenders began to offer higher LTV mortgages
    • In turn, buyers have been taking up high LTV mortgages
  • There is concern surrounding high LTV mortgages because of the risks they pose
    • High LTV mortgages expose borrowers to a greater extent than traditional mortgages
    • Higher exposure is particularly troubling as the economic climate is becoming more difficult
      • House price growth is now slowing, though 2007 looks still to be a strong year for most regions in the UK
      • Interest rates have risen since the second half of 2006 and caused mortgage rates to rise
      • Arrears and repossessions continue to rise but remain low
      • Unsecured bad debt continues to rise
      • Most importantly, the economic climate looks more uncertain given recent events in the financial world
    • It is not in lenders' interests for borrowers to be unable to afford their mortgages
  • The risk for most lenders nevertheless remains low
    • High LTV mortgages remain a very small proportion of the overall mainstream market
      • Major lenders are not particularly exposed to high LTV lending
      • Recent mortgage lending, however, poses more risk
      • Even for mortgages with LTVs of around 80-90% there is still some risk
    • For some specialist sectors, however, high LTV mortgages could be more of a problem
      • Self-certification mortgages are now available at higher LTVs but some customers overstate their incomes
      • While buy-to-let LTVs remain largely under 85%, rental income is not the only factor to affect affordability
      • Lenders operating in the sub-prime prime sector are at greatest risk
    • But lenders are recognizing the risks since the credit crunch and making lending criteria more stringent
      • Mainstream lenders have lowered LTVs and raised prices
      • Lending criteria and products have been cut back particularly in the sub-prime mortgage market
  • Still, lenders should be prepared should a number of scenarios occur
    • A number of scenarios could affect both mortgagors and lenders with high LTV mortgages
      • A significant rise in interest rates would see an increased number of borrowers in payment difficulties
      • A house price crash would throw a significant number of borrowers into negative equity
      • Should an economic downturn occur, borrowers' savings would not cover payments for long
    • Lenders should take the right precautions to avoid danger in the future
• APPENDIX
  • Supplementary data
  • Definitions
    • Bank of England base rate
    • Buy-to-let mortgage
    • LTV
    • Self-certification mortgage
    • Sub-prime
    • Variable mortgage
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: LTV at origination of all loans for house purchase in the UK, Q2 2005-Q4 2006 (%)
    • Table 2: Change and percentage change in the number of products available in the UK mortgage market, July-September 2007
    • Table 3: UK properties in arrears and taken into possession, H1 1995-H1 2007 (units)
  • List of Figures
    • Figure 1: Arrears and repossessions are on the increase in the UK, H1 1994-H1 2007