The increase, which has been most notable over the third quarter of 2012, reflects lenders’ willingness to better understand the inherent risks present in their mortgage books.
It comes in response to Basel and the Vickers report and highlights how lenders are becoming increasingly vigilant as they deal with the challenge of deleveraging while facing up to new capital leverage ratios and liquidity standards.
David Catt, chief operating officer at Hometrack, said: “Our evidence shows that there is clearly a desire on the part of lenders both large and small to go beyond simply accommodating regulation.
“They want to demonstrate improved risk management; to be seen to be doing the right thing not just by the regulators, but also by their shareholders, investors and customers.”
Catt said the regulatory landscape across the UK and Europe has been changing at an unprecedented rate as under Basel banks must meet further regulatory capital requirements.
Meanwhile ring fencing recommendations by Sir John Vickers will define higher leverage and core tier one capital ratios. And at the same time the Financial Policy Committee said that lenders should also be seeking opportunities to raise capital externally.
He added: “Lenders are clearly striving to meet the demands of the regulator. Indeed for many there is a willingness to go beyond merely satisfying minimum statutory capital requirements. A new norm is being set and for those who are smart there are clear opportunities to be had. Regulation is more than a matter of compliance. Greater understanding of a mortgage portfolio clearly equates to good business sense. Seeing where the risks and opportunities lie allows for better planning and strategic decision-making.”
