Business
U.K. Lenders Confront Biggest Mortgage Test Since 2008 Crash
- Pandemic could drive down riskiest borrowers’ property values
- Help to Buy program may also leave government exposed
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British mortgage providers, frustrated that sales volumes failed to match the highs before the global financial crisis, spent the last two years cutting margins and taking on riskier buyers. With the pandemic now hanging over house prices, they’re about to find out if their customers are as solid as they thought.
Values soared following the 2008 crunch, helped by government programs to boost demand and low borrowing costs. Then lenders relaxed standards in a scramble for business as Brexit deterred buyers, leading Sam Woods, chief executive officer of the Prudential Regulation Authority, to warn last May that regulators should be “watching them like a hawk.”