90%+ LTV accounts for 2% of lending: FSA

The total value of outstanding loans at the end of the fourth quarter of 2011 was £1,218 billion, an increase of less than 0.1% on last quarter, the FSA has revealed.

New advances in the quarter amounted to £40 billion, 8% lower than in the third quarter of 2011 but some 9% higher than the amount advanced in the fourth quarter of 2011 2010.

The overall average interest rate on new advances continued to fall during the quarter, down from 3.59% to 3.49%, a new low for the series. The FSA said the reduction was a result of a fall in the rate for fixed rate lending more than offsetting a small increase in the variable rate.

New commitments totalled £37 billion in the quarter, 11% down on the third quarter of 2011 but 7% higher than in the fourth quarter of 2011 last year.

Lending for house purchase accounted for 61% of new advances, up on the third quarter of 2011, and 58% of commitments, a small decrease from last quarter. The proportion of advances for remortgages (32%) was much as in the third quarter of 2011, though there was an increase in commitments from 32% to 34%.

The proportion of new lending done at an LTV of more than 90% continued to be below 2% in the fourth quarter of 2011, as it was throughout 2011.

New lending with a combination of high LTV and high income multiple rose slightly in the final quarter of the year and accounted for just over 1% of new lending.

The proportion of loans to borrowers with an impaired credit history remained at 0.4% for the third successive quarter. It has been below 1% since the end of 2008.

In the fourth quarter of 2011 there were 34,600 new arrears cases which was down 1% on last quarter and 14% lower than in the fourth quarter of 2011 last year. Consequently, the total number of accounts in arrears at the end of the quarter also fell and, at 313,200, was 3% down on the third quarter of 2011 and 9% below the fourth quarter of 2011 2010.

The FSA said the proportion of the residential loan book that is in arrears, and hence not fully performing also continued on a downward trend, to 2.61% from 2.72% last quarter.

The number of new possessions in the quarter fell by 9% to 8,827 and arrears totalling £36 million on 9,815 accounts were capitalised in the fourth quarter of 2011.