Croydon has been named as the UK’s number one hotspot for high-risk mortgage lending, thanks to the town’s regeneration and gentrification.
The South London town saw 463 risky mortgages taken out in the area in 2017, up 11% from 419 the previous year, according to peer-to-peer secured property lending platform Lendy.
Croydon’s 463 risky mortgages places it top out of all 2,578 postcode areas studied in 2017.
The UK average was just 39 risky mortgages per area last year.
According to Bank of England guidance, mortgages are considered high-risk if they are lent at 4.5 times or more of the applicant’s salary.
The number of high-risk mortgages in Croydon reflects the turnaround in its reputation.
“Once seen as one of the least glamorous parts of London, it has surprised many by becoming one of the hottest areas in the capital’s residential property market,” Lendy said.
Croydon is now established as one of the UK’s leading technology hubs, with over 1,500 tech start-ups based in Croydon Tech City.
Croydon’s Boxpark, opened in 2017, and the upcoming Westfield Shopping Centre, due to begin construction in mid-2019, are examples of the ongoing redevelopment and gentrification of the area.
Croydon was the only area in South London that saw house prices rise in the year to February.
Walthamstow (421 risky mortgages), Wandsworth (363), Streatham (322) and Tooting (319) are the other leading areas for risky mortgages in the UK.
This is followed by Brighton with 313 risky mortgages, Hove (296), Battersea (296), Farnborough (294) and Wimbledon (276).
Overall, the number of risky mortgages in the UK jumped by 15% last year, with 101,380 approved by banks.
Lendy argued that the increase in the number of risky mortgages to residential purchasers means that even less funding is available to property developers.
“Banks are still piling into the owner-occupier market and choosing to lend more to risky mortgage borrowers rather than property developers,” said Lendy chief executive Liam Brooke. “If just some of this lending went to well-run property developers, it would get more spades in the ground, more houses built and start to alleviate the housing crisis.”