London Cash Buyers Send Banks North to Riskier Loans: Mortgages

The risky loans that helped cause the U.K.’s real-estate crash are making a comeback as cash buyers from abroad limit lending opportunities in London and banks instead venture into the weakest markets.

Five years after Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, the U.K.’s biggest mortgage lender, were bailed out by the government, the number of mortgages with down payments of 15 percent or less rose almost 50 percent in August from a year earlier. In London, where prices are rising fastest, only 1 in 25 borrowers took out a low down-payment loan. In the north of England, the country’s most volatile housing market, it’s about one in five, according to property appraisal firm e.surv Ltd.