Bradford & Bingley reports rise in arrears

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by Gill Montia

Buy-to-let specialist, Bradford & Bingley (B&B), has reported a rise in mortgage arrears.

The proportion of borrowers one month in arrears rose from 2.78% in March, to slightly over 3% in April.

Over 50% of B&B’s lending is in the buy-to-let sector but despite the mounting arrears, the firm remains confident that the sector remains strong.

This view is supported by the fact that tenant demand and average rents are rising across the UK, with the notable exception of some major cities such as Nottingham and Liverpool, where there is an oversupply of city centre flats.

However, the rise in arrears will increase speculation that B&B could need to raise new capital.

The lender has strongly denied recent rumours that its capital base may need shoring up; reminding speculators that it has not yet drawn on a £2 billion package of funding that is already arranged.

However, its position is seen as vulnerable because of predictions of a crash in the buy-to-let market, led by amateur landlords who will be unable to re-mortgage at higher loan-to-value ratios, and the plummeting values of some city centre apartments.