Mortgage Product Sales Data PSD Trends Report

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					               Mortgage
Product Sales Data (PSD)
           Trends Report


            September 2008
Mortgage
Product Sales Data (PSD)
Trends Report
September 2008

Contents
1. Highlights                                                2

2. What is product sales data?                               3

3. What information is available from mortgage PSD?          5

4. How does mortgage PSD compare to other published data?    6

5. Sales and interest rate trends                            7

6. Selling channels and advised/non-advised basis            9

7. Repayment methods                                        10

8. Borrower type analysis                                   11

9. Income multiples                                         13

10. Loan to value (LTV) ratios                              14

11. Impaired credit mortgages                               15

12. Lifetime mortgages                                      17

13. Appendix                                                18
1. Highlights

All figures relate to reported mortgage sales transacted between 1 April 2007 and 31 March
2008, unless stated otherwise.
Sales                   Two million mortgage sales with a total value of £282 billion have been reported
                        using mortgage PSD (2006/07 – 2.3 million sales with a value of £300 billion).

                        Average loan value as reported was £139,000 (2006/07 – £128,000).

                        53% of all transactions were remortgages (2006/07 – 50%); 30% were home
                        movers (2006/07 – 32%); 16% were first-time buyers (2006/07 – 17%).

                        Mortgage sales for house purchases (ie, excluding remortgages) were 40% lower
                        in Q1 2008 than Q1 2007.

                        Ten mortgage lenders accounted for over 70% of the market by sales volume.
Interest Rates          70% of all sales were fixed-rate mortgages (2006/07 – 66%).

                        84% of first-time buyers opted for a fixed-rate mortgage (2006/07 – 79%).

                        Average initial interest paid for all types of mortgages (where recorded) was
                        5.9% (2006/07 – 5.2%).
Selling Channels        62% of all mortgages were sold by intermediary channels (2006/07 – 57%).

                        38% of mortgages were direct sales by banks and other mortgages lenders.

Advice                  70% of all mortgage transactions made were advised sales (2006/07 – 71%).

                        91% of all mortgages sold by intermediaries were advised sales.

                        37% of all mortgages sold by banks and other lenders were advised sales.

Repayment Methods       60% of customers chose Capital and Interest as their mortgage repayment method
                        (2006/07 – 64%).

                        25% of mortgages sold were interest-only mortgages where the borrower did not
                        have a dedicated repayment vehicle or the lender was not aware of the repayment
                        vehicle (2006/07 – 23%).
Income multiples        28% of all borrowers borrowed more than 3.5 times their income (2006/07 – 25%).

                        45% of first-time borrowers borrowed more than 3.5 times their income
                        (2006/07 – 40%).
Loan-to-value ratios    61% of mortgage lending was to borrowers requiring loan-to-value ratios of less
                        than 75% (2006/07 – 60%).

                        Mortgage lending with loan-to-value ratios in excess of 90% accounted for
                        13% of all mortgage sales (2006/07 – 13%).

Impaired credit         3.5% of all mortgages advanced were impaired credit mortgages (2006/07 – 4%).

                        80% of impaired credit mortgage sales were advised sales.

                        Sales of impaired credit mortgages in Q1 2008 were 54% lower than Q1 2007.




Mortgage Product Sales Data                        2                                         Trends Report
2. What is Product Sales Data?

Since 1 April 2005, product providers have been required to provide the FSA with transaction
level data on all sales of regulated mortgage contracts, retail investment products and certain pure
protection products to retail and private customers. This covers direct sales by firms’ own sales
forces and sales made by intermediaries. Between April 2007 and March 2008 approximately
520 firms provided PSD reports, with around 180 reporting mortgages, 330 reporting retail
investment products and 45 reporting pure protection products. Some firms report on more than
one product area.

Reporting firms are required to submit PSD reports quarterly. By 31 March 2008 we had
received PSD for 12 calendar quarters, covering over 18 million transactions.

PSD provides an important source of information that aids our risk-based supervision strategy
in relation to retail firms and markets. The nature of the data means we can use it both at the
detailed level to identify individual sales by firms and also at the aggregate level to monitor
product and market sales patterns. Examples of how we make use of PSD include the following:

•   In the course of our supervision of individual firms (both providers and intermediaries) we
    can identify the sales of a particular product or products by a firm. This helps to provide us
    with an insight into the business of a firm and how it is transacted.

•   By analysing transactions reported in PSD, or comparing them with other data sources, we
    can identify potential risks arising from firms. For example, PSD is one of the sources of
    data used by our risk profiling tool, which generates alerts and risk indicators for firms and
    is a key element of our supervisory strategy, particularly in relation to small firms. In
    combination with other data, we have also been able to use PSD to help identify suspicious
    or fraudulent transactions conducted through firms.

•   Aggregate data derived from PSD helps us in our thematic supervision work, such as to spot
    trends in the market, sales patterns and regional differences. It helps us to identify which
    firms to include in thematic reviews as it tells us which firms are active in each market. PSD
    also contributes to our strategic policy work, such as in aiding our understanding of
    distribution channels of products.

Please note the following points:

1. This report focuses on the volume of transactions, not the value.

2. To make our analysis clearer, all data reported under the ‘other’ or ‘unknown’ categories
   has been removed.

3. Some totals may show slight discrepancies due to rounding of figures.

4. Since 1 April 2006, all PSD reporting firms have been required to state whether customers
   received advice at the point of sale. For more information on what constitutes an advised
   sale, please refer to the appendix.

In December 2005, we made a commitment to the industry to publish aggregate PSD. We first
published data in June 2007 covering the period April 2005 to March 2007. We will also be




Mortgage Product Sales Data                      3                                      Trends Report
publishing equivalent PSD reports for retail investments and pure protection contracts and
further issues of these reports in the future.

If you have any comments on the content of this report or suggestions on how we might
improve future issues of the PSD reports please contact us at: product.sales@fsa.gov.uk.
We welcome your feedback.




Mortgage Product Sales Data                    4                                    Trends Report
3. What information is available from Mortgage PSD?

Details of loans for house purchases and remortgages are captured by mortgage PSD, but data
relating to further advances is not. Additionally, mortgage PSD only covers regulated mortgage
contracts and therefore excludes products such as second charge lending, commercial and buy-
to-let mortgages.

A reportable mortgage transaction applies where the transaction has completed (ie, the funds
have been transferred from the lender to the borrower and have been applied for the purpose
of the mortgage).

Definitions of terms relating to mortgage PSD are included in the appendix.




Mortgage Product Sales Data                    5                                   Trends Report
4. How does mortgage PSD compare to other published data?

The data submitted by each lender for mortgage PSD is the same as the data submitted to the
Council of Mortgage Lenders (CML) for their Regulated Mortgage Survey. However, the
figures published from the Regulated Mortgage Survey will differ from mortgage PSD because a
small number of mortgage lenders do not submit data to the CML.

Other sources of mortgage data that may be published from time to time by the FSA, such as
that derived from the Mortgage Lending and Administration Return (MLAR) may not be
directly comparable to mortgage PSD due to differences in data coverage, such as:

•   further mortgage advances being included in the MLAR but not in the PSD; and

•   calculations being based on the value of advances rather than the volume of transactions.

Users of this report are therefore advised to take care in comparing mortgage PSD with other
such data.




Mortgage Product Sales Data                    6                                    Trends Report
5. Sales and interest rate trends

Over two million mortgage sales were reported between 1 April 2007 and 31 March 2008
(2006/07 – 2.3 million). Monthly sales dipped significantly from late 2007 onwards as the
effects of the credit squeeze took effect and lenders tightened their lending. Total sales in Q1
2008 (395,000) were down around 23% compared to Q1 2007 (510,000). Around 180 lenders
reported mortgages sales using PSD. Of these, the top ten lenders accounted for over 70% of all
sales by volume.

                                               200                                                                 6.5

                                               180
          Number of transactions (thousands)




                                               160                                                                 6

                                               140




                                                                                                                         Interest Rate (%)
                                                                                                                                             Sales
                                               120                                                                 5.5

                                                                                                                                             Avge Initial
                                               100
                                                                                                                                             Rate Paid
                                               80                                                                  5                         BoE Base
                                                                                                                                             Rate
                                               60

                                               40                                                                  4.5

                                               20

                                                0                                                                  4
                                                     Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar-
                                                     07    07 07 07       07 07 07       07 07 08       08 08

Figure 1: Mortgage sales trends and interest rates – April 2007 to March 2008
Source: FSA mortgage PSD

Note: The initial interest rate paid (ie reflecting any discounted rate at the start of the mortgage) is an optional field in
mortgage PSD and was completed for around two-thirds of transactions recorded for 2007/08.

The average initial interest rate paid by all borrowers, where recorded, was 5.9% (2006/07 –
5.2%). This steadily increased from just over 5.5% in April 2007 to 6.1% in November 2007
before falling back below 6% in 2008 as the Bank of England reduced base rates. The gap between
the rate paid by borrowers and base rate widened towards the end of the period.

Fixed interest rate mortgages were by far the most popular over the period, accounting for around
70% of all mortgages sold, which was up on 2006/07 (66%). Fixed rate mortgages peaked in Q2
2007, when they accounted for 77% of all mortgages, but declined as a proportion thereafter and
only accounted for 55% of sales in Q1 2008. Most of the difference was taken up by base-rate
tracker mortgages, which increased from 14% of the total in April 2007 to 31% by March 2008.
Standard variable rate mortgages accounted for just 4% of the total market.




Mortgage Product Sales Data                                                               7                                                       Trends Report
The split of mortgage sales by interest rate type can be seen in Figure 2.

                                    100%




                                    80%
        Share of transactions (%)




                                                                                                             Capped rate


                                                                                                             Standard
                                    60%
                                                                                                             variable rate
                                                                                                             Discounted
                                                                                                             variable rate
                                                                                                             Tracker
                                    40%

                                                                                                             Fixed Rate


                                    20%




                                     0%
                                           Apr- May- Jun-   Jul-   Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar-
                                           07    07   07    07      07   07  07    07   07   08   08   08

Figure 2: Mortgages by interest rate type – April 2007 to March 2008
Source: FSA mortgage PSD




Mortgage Product Sales Data                                                   8                                    Trends Report
6. Selling channels and advised/non-advised basis




                        Direct
                        38%




                                                                           Intermediary
                                                                               62%




Figure 3: Mortgage sales by selling channels – April 2007 to March 2008
Source: FSA mortgage PSD; FSA internal categorisation of regulated firms

62% of all reported mortgages were sold via intermediary channels, the majority of which were
mortgage brokers or financial advisers. The remaining 38% were direct sales by banks, building
societies and other mortgage lenders. The proportion of total sales made via intermediaries was
up from 57% in 2006/07.




               Intermediary


                                                                                          Advised Sale
                                                                                          Non Advised


                     Direct




                          0%        20%        40%       60%        80%     100%


Figure 4: Advised sales by selling channels – April 2007 to March 2008
Source: FSA mortgage PSD; FSA internal categorisation of regulated firms

The vast majority (91%) of all mortgages sold by intermediaries were on an advised basis, but
only 37% of the mortgages sold direct were on an advised basis.




Mortgage Product Sales Data                               9                                              Trends Report
7. Repayment methods

                                            140
                                                            Capital And
                                                            Interest

                                            120
       Number of transactions (thousands)




                                            100

                                                            Interest Only
                                                            with an
                                            80
                                                            Unknown
                                                            Repayment
                                                            Vehicle
                                            60



                                            40


                                                                             Interest Only with a Repayment Vehicle
                                            20

                                                                 Mix of 'Capital And Interest' and 'Interest
                                                                 Only'
                                             0
                                             Apr-07 May-07 Jun-07   Jul-07     Aug-07 Sep-07 Oct-07 Nov-07 Dec-07          Jan-08 Feb-08 Mar-08

Figure 5: Mortgage repayment methods – April 2007 to March 2008
Source: FSA Mortgage PSD

Between April 2007 and March 2008, 60% of mortgage customers (1,204,000) chose the
capital and interest repayment option. A further 137,000 (7%) were a mixture of capital
repayment and interest only mortgages.

The remaining 653,000 (33%) were interest-only mortgages. Of these, there were 163,000 (8%)
cases where the customer had a known repayment vehicle (ie, an ISA, endowment or pension
plan designed to pay off the mortgage at the end of its term). For 490,000 (25%) cases the
customer did not make their repayment vehicle known to their mortgage lender. In such cases
the borrower may have a payment plan in place but not declared it to the lender, or may be
relying on another means of repaying the capital, or may genuinely have no repayment vehicle.

Interest rate                                                  Capital and            Interest only with            Interest only with   Mix of capital and
                                                                 interest                an unknown                    a repayment          interest and
                                                                                     repayment vehicle                    vehicle          interest only
Total mortgage                                                      1,204,000                       490,000                   163,000               137,000
transactions*
Fixed (%)                                                                     74%                          64%                    61%                   59%
Tracker (%)                                                                   17%                          23%                    23%                   28%
Discounted variable (%)                                                        5%                          10%                    10%                     9%
Standard variable (%)                                                          4%                              2%                   6%                    4%
Capped (%)                                                                     1%                         0.4%                      0%                    0%

Table 1: Interest rates as percentages of repayment methods – April 2007 to March 2008
* A further 13,000 mortgages were reported with ‘unknown’ as the repayment method.
Source: FSA mortgage PSD




Mortgage Product Sales Data                                                                      10                                               Trends Report
8. Borrower type analysis

Mortgage PSD shows that just over half of all mortgages (53%) were arranged for people who
were remortgaging (2006/07 – 50%). The number of remortgages declined steeply at the end of
2007 before recovering to some extent in Q1 2008. Home movers (second time or subsequent
buyers) accounted for 30% of all mortgage sales (2006/07 – 32%). First-time buyers accounted
for 16% of sales (2006/07 – 17%).
                                                  120

                                                        Remortgagers

                                                  100
             Number of transactions (thousands)




                                                   80
                                                         Home Movers



                                                   60


                                                         First Time
                                                   40    Buyers



                                                   20
                                                         Right To Buy


                                                    0
                                                   Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08


Figure 6: Mortgage repayment methods – April 2007 to March 2008
Source: FSA Mortgage PSD

Mortgage sales showed significant falls from December 2007 and into 2008 – total sales in Q1
2008 were down by 23% on Q1 2007. However, there were significant variations by type of
mortgage borrower within this, as shown in Table 2. While remortgages were down by only
9%, loans for house purchases were down by 40% (home mover mortgages by 41% and first-
time buyer mortgages by 37%).

                                                                  Remortgagers        Home movers         First-time buyers        Right to buy
Q1 2007                                                                  263,000               148,000                 78,000                  6,000
Q1 2008                                                                  240,000                87,000                 49,000                  3,000
% Fall                                                                        9%                   41%                    37%                    50%

Table 2: Mortgage sales by borrower type Q1 2007 vs Q2 2008
Source: FSA Mortgage PSD




Mortgage Product Sales Data                                                              11                                              Trends Report
Table 3 below shows that 84% of first-time buyers opted for fixed-rate mortgages – a much
higher proportion than home movers (68%) and remortgagers (66%).

                               Remortgagers          Home movers            First-time buyers           Right to buy
Borrower type total *               1,029,000                  582,000                 306,000                  18,000

Fixed (%)                                  66%                      68%                     84%                    87%
Tracker (%)                                22%                      21%                     10%                        6%
Discounted variable (%)                     8%                       7%                       5%                       6%
Standard variable (%)                       4%                       3%                       2%                       2%
Capped (%)                                  1%                     0.5%                     0.2%                  0.2%


Table 3: Interest rates as percentages of borrower types – April 2007 to March 2008
* A further 70,000 mortgages were reported under the ‘unknown’, ‘other’ and ‘business’ borrower type.
Source: FSA mortgage PSD




Mortgage Product Sales Data                                 12                                              Trends Report
9. Income multiples

Income multiple                    Total mortgages              Joint income                    Sole income

< 2.5                                         727,000                        456,000                         271,000
2.5 to 3.49                                   693,000                        370,000                         323,000
3.5 to 4.49                                   442,000                        179,000                         263,000
>4.5                                          113,000                          40,000                         73,000

Table 4: Income multiples– April 2007 to March 2008
Source: FSA Mortgage PSD

Lending less than 3.5 times income accounted for 72% of all reported mortgages (2006/07 –
75%). Mortgages with income multiples between 3.5 and 4.5 accounted for 22% (2006/07 –
20%) and those over 4.5 around 6% of the total (2006/07 – 5%). However, there were variations
within this depending on the income basis and borrower type. On average, those borrowing on
the basis of a sole income, not surprisingly, required a higher multiple than joint borrowers.

Looking at the four main borrower types (see Table 5) 45% of all first-time buyers required a
loan to income multiple of greater than 3.5, compared to 33% of home movers and 20% of
remortgagers. Of those first-time borrowers borrowing on the basis of a single income, 54%
required an income multiple of greater than 3.5 and 10% required one greater than 4.5.


                       Remortgagers             Home Movers            First-time buyers          Right To Buy
Income
Multiple              Joint        Sole       Joint         Sole       Joint        Sole         Joint        Sole
                     Income      Income      Income       Income      Income      Income        Income      Income
< 2.5                    29%          17%         19%         12%          10%            6%       21%           20%
2.5 to 3.49              17%          17%         21%         16%          22%            22%      13%           24%
3.5 to 4.49                6%         11%         12%         14%          15%            20%       5%           14%
>4.5                       1%          2%          3%           4%          3%            7%        1%            3%

Table 5: Income multiples as percentages of borrower types – April 2007 to March 2008
(Percentages shown are the proportion of the total sales for each category of borrower)
Source: FSA mortgage PSD




Mortgage Product Sales Data                              13                                              Trends Report
10. Loan to Value (LTV) ratios

LTV ratios               % of total mortgages
< 75%                                       61%
75% to 89%                                  26%
90% to 94%                                   9%
95% to 100%                                  4%
>100%                                     <0.5%

Table 6: LTV ratios – April 2007 to March 2008
Source: FSA Mortgage PSD

LTVs of less than 75% accounted for 61% of all PSD reportable mortgages between April 2007
and March 2008. LTVs in excess of 90% accounted for around 13% of mortgage lending
(260,000 mortgages) and LTVs over 100% accounted for less than 0.5% (fewer than 10,000
mortgages).

The overall LTV pattern of lending for 2007/08 did not change significantly compared to
2006/07, but in Q1 2008 there were signs of a shift towards lower LTV lending. The proportion
of LTVs of less than 75% increased to 64% from 60% in Q4 2007 and the proportion of LTVs
in excess of 90% fell to 10% from 14%.

LTV ratios                    Remortgagers           Home movers            First-time buyers   Right to buy
< 75%                                       75%                   54%                    23%               58%
75% to 89%                                  21%                   32%                    34%               36%
90% to 94%                                   3%                     10                   25%                   4%
95% to 100%                                  1%                    4%                    16%                   2%
>100%                                      0.1%                  0.3%                     2%              0.2%

Table 7: LTVs as percentages of borrower types – April 2007 to March 2008
Source: FSA Mortgage PSD

Table 7 shows that three quarters of remortgagers and just over half of home movers borrowed
at LTV ratios of less than 75%. In contrast, only around a quarter of first-time buyers borrowed
at less than 75% LTV. 43% of first-time buyers borrowed more than 90% and 2% borrowed
more than 100% of the value of the property.




Mortgage Product Sales Data                             14                                         Trends Report
11. Impaired credit mortgages

Between April 2007 and March 2008, 68,500 mortgages were advanced to borrowers with an
impaired credit history (see appendix for a full definition of impaired credit mortgages). These
accounted for around 3.5% of all mortgages reported on PSD (2006/07 – 4%). Around 100
lenders sold impaired credit mortgages and of these the top ten lenders accounted for around
65% of the market.

                                        9000


                                        8000


                                        7000
               Number of transactions




                                        6000


                                        5000


                                        4000


                                        3000


                                        2000


                                        1000


                                          0
                                               Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08

Figure 7: Impaired credit mortgage sales April 2007 – March 2008
Source: FSA Mortgage PSD

The sales of impaired credit mortgages declined significantly from late 2007 and by a greater
extent than the mortgage market as a whole. Impaired credit transactions in Q1 2008
represented less than 2.5 % of the total for the quarter and were down 54% on Q1 2007, as
lenders tightened their lending criteria. The decline in impaired lending is expected to continue
this year.


                                                    Impaired credit                  Advised sales
Selling channel
                                                    mortgages                        (% of Selling channel)
Intermediary sales                                                            82%                              88%
Direct sales                                                                  18%                              43%

Table 8: Impaired credit mortgages by selling channel and advice basis – April 2007 to March 2008
Source: FSA mortgage PSD

82% of impaired credit mortgages were sold by intermediaries and 18% by banks and other
lenders. 88% of intermediary sales were advised sales compared to 43% of direct sales. 80% of
all impaired credit mortgages were advised sales (2006/07 – 79%).




Mortgage Product Sales Data                                                       15                                                 Trends Report
The top postal areas for impaired credit mortgages, ranked by the proportion of all sales, are
shown in Table 9. In these areas, impaired credit mortgages accounted for more than 5% of
total sales.

Postal Areas
Sunderland
Liverpool
Wigan
Newport
Teeside
Doncaster

Table 9: Postal areas where impaired credit mortgages more than 5% of all sales – April 2007 to March 2008
Source: FSA mortgage PSD




Mortgage Product Sales Data                            16                                           Trends Report
12. Lifetime mortgages

                                                                   Advised Sale   Non Advised Sale

                                  2500




                                  2000
         Number of transactions




                                  1500




                                  1000




                                  500




                                    0
                                         Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08

Figure 8: Sales of lifetime mortgages April 2007-March 2008
Source: FSA mortgage PSD

There were approximately 22,200 Lifetime Mortgages (LTMs) sold between April 2007 and
March 2008, accounting for just over 1% of all mortgages sold. The volume of LTMs sold
dropped by 27%, from 6,400 sales in Q1 2007 to 4,700 sales in Q1 2008.

In the same period there were 32 provider firms offering LTMs. The top five provider firms
(ranked by volume of sales) accounted for a 67% market share.

95% of all LTMs were sold on an advised basis.

The average age of a person taking out an LTM was 71 years old.



Home reversion plans
Limited data on the sales of home reversion plans has been collected by FSA since 1 October 2007.
In the six-month period to 31 March 2008, a total of 18 provider firms transacted 620 plans.
74% of these were advised transactions.




Mortgage Product Sales Data                                                       17                                           Trends Report
    13. Appendix

    Product Sales Data Definitions1 – Mortgages2

    Advised/                           An advised sale occurs when an advisor of a regulated firm gives a
    Non-Advised Sales                  personal recommendation to the customer after assessing the customer’s
                                       needs and circumstances. This is specific and individual advice to the
                                       customer and is not generic.

                                       A non-advised sale occurs when no personal recommendation is made to
                                       the customer. The customer receives information on the product to enable
                                       them to make an informed decision as to whether it meets their own needs
                                       and circumstances. Non-advised sales include ‘execution only’ and ‘direct
                                       offer transactions’.
    Capped and Collared                A variable interest rate that is guaranteed not to exceed a stated maximum
                                       rate (the capped rate) for a specific period of time. Also includes products
                                       where the interest rate is subject to a minimum rate (the collared rate).

    Discounted Rate                    Where a discount is applied to the lender’s standard variable rate, usually
                                       for a limited period.
    Fixed Rate                         Where the interest rate is fixed for a stated period.

    Home reversion plan                An equity release arrangement where the occupier of a property sells the
                                       property (or a part interest in it) to the reversion provider and receives a
                                       lump sum and/or an income in return. The occupier retains the right to live
                                       in the property under a lease of life or until a specified event occurs.
    Lifetime Mortgage                  A regulated mortgage contract, which is targeted at older customers and is
                                       repaid by selling the property when the customer dies, goes into long-term
                                       care or otherwise vacates the property.




1   The definitions in this appendix have been compiled from various sources including the FSA Handbook Glossary, FSA Policy, Supervision Manual,
    Chapter 16 Annex 20G and the Council of Mortgage Lenders Housing Finance Issue, July 2005 and November 2006.
2   Mortgage PSD includes regulated mortgage contracts only, therefore excludes unregulated products such as second charge lending, commercial and
    buy-to-let mortgages.



    Mortgage Product Sales Data                                            18                                                        Trends Report
Impaired                Mortgage lending to a borrower who does not have a standard credit
Credit Mortgage         history, ie a recent history of either:

                        (a) arrears on a mortgage or secured loan. This applies to secured loans
                        where the borrower(s) has arrears on a previous (or current) mortgage or
                        other secured loan within the last two years, where the cumulative amount
                        overdue at any point reached three or more monthly payments; or

                        (b) arrears on an unsecured loan. This applies to unsecured loans where
                        the borrower(s) has arrears on a previous (or current) mortgage or other
                        secured loan within the last two years where the cumulative amount
                        overdue at any point reached three or more monthly payments; or

                        (c) Individual Voluntary Arrangement (IVA). This applies where the
                        borrower(s) has been subject to an IVA at any time within the last 3 years; or

                        (d) bankruptcy. This applies where the borrower(s) has been subject to a
                        bankruptcy order at any time within the last three years.
Standard Variable       The rate that is the lender’s underlying variable interest rate. This rate is a
Rate                    basic variable rate charged to borrowers with no discounts or other special
                        deals. It is also the rate used by the lender as a reference rate when defining
                        a discounted variable rate product (eg, discounted product ABC is 0.50%
                        below the lender’s standard variable or basic rate). This is the rate that
                        mortgage deals will often revert to after a special rate period.

Total Gross             This is the total of the gross annual incomes (before tax or other
Income                  deductions) of each of the individual borrowers whose incomes were taken
                        into account when the lender made the lending assessment/decision. For
                        these purposes, each borrower’s gross income is the sum of that person’s
                        main income and any other reckonable income (eg, overtime and/or income
                        from other sources, to the extent that the lender takes such additional
                        income into account in whole or in part).

Tracker                 Where the interest rate is guaranteed to move in line with either the Bank
                        of England Base Rate (BBR) or another index such as London InterBank
                        Offered Rate (LIBOR). The rate can track above, below, or at the same
                        level as the index rate.




Mortgage Product Sales Data                      19                                       Trends Report

				
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