HBOS Reveal Surge In Arrears On Unsecured Lending

Wed, 05 Nov 2008

HBOS has revealed that mortgage arrears and defaults on unsecured lending have risen by over 3.5 per cent since the start of 2008.

The bank has confirmed that arrears on self-certified mortgages, which represent 12.6 per cent of the lender's total home loans, increased to 3.59 per cent during the nine months 30 September 2008.

The increase in arrears, along with the decline in house prices, has resulted in a £440 million charge so far this year.

HBOS said the decline in house prices has also impacted the average loan-to-value (LTV) ratio of its mortgages, which at 52 per cent at the end of September, compared to 48 per cent at the end of June.

Furthermore, corporate lending at the bank has also suffered, particularly in the construction and real estate sectors, HBOS added.

A spokesperson for the company said its strong brands and leadership position for retail banking will see it through the current financial markets turmoil, and added that the bank will take a more "selective" approach to international and corporate markets.

The Financial Services Authority (FSA) has revealed that repossessions in the UK soared by 71 per cent in the three months to the end of June – a figure that is expected to carry on rising as more homeowners continue to struggle with mortgage payments.
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