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Mortgage Lenders & Administrators Return (MLAR) Summary

Core Content

The Mortgage Lenders & Administrators Return (MLAR) is a quarterly data collection requirement for regulated mortgage lenders and administrators in the UK. It provides comprehensive data on mortgage lending activities, covering both regulated and non-regulated residential lending. The data are jointly compiled and published by the Bank of England Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), following their establishment on 1 April 2013.

Key Information

• Reporting Population: Approximately 340 regulated mortgage lenders and administrators are required to submit MLAR data. Lenders with only non-regulated lending are exempt.
• Regulated vs. Non-Regulated Loans:
  • Regulated Loans: Secured by a first charge on residential property for the borrower or a close relative. Second charge lending was included in regulated lending from 21 March 2016.
  • Non-Regulated Loans: Includes buy-to-let, further advances on pre-2004 loans, and second charge lending before 2016. These are generally not subject to the same regulatory requirements.
• Data Collection:
  • Gross Advances: Total new loans issued.
  • Net Advances: Gross advances minus borrower repayments.
  • New Commitments: Lending agreements for future advances.
• Lending Criteria:
  • Loan-to-Value (LTV): Loan amount as a percentage of the property value.
  • Income Multiple: Loan amount as a multiple of the borrower's main income (pre-tax).
  • Impaired Credit History: Includes arrears of three months or more in the last two years, county court judgments (CCJs) over £500 in the last three years, or bankruptcy/IVA orders within three years.
• Interest Rate Analysis:
  • MLAR classifies mortgages as either fixed or variable rate.
  • Fixed rate includes products with fixed terms, caps, or collars.
  • Variable rate includes all other interest bases, including those at a premium or discount to the Bank of England Bank Rate (BBR).
  • Weighted Average Interest Rates are calculated using amounts outstanding at the previous reporting date.
• Arrears and Possessions:
  • Arrears: Defined as overdue payments (capital, interest, fees) of 1.5% or more of the loan balance.
  • Temporary Concessions: Agreements to suspend or reduce monthly payments.
  • Formal Arrangements: Capitalisation of arrears or increased payments to reduce arrears.
  • Possession: Refers to any method by which the lender takes control of the secured property, including court orders or voluntary surrender.
  • MLAR reports on individual loan accounts in possession, not necessarily the number of borrowers.
• Arrears Threshold:
  • The 1.5% threshold for reporting arrears was introduced to replace the earlier 2.5% threshold used by building societies in the 1990s.
  • Sub-totals for both thresholds are included in the detailed tables for comparison.
• Data Differences:
  • MLAR reports on individual loan accounts, which may differ from the borrower-level data reported by the Council for Mortgage Lenders (CML).
  • MLAR uses a lower threshold (1.5%) for arrears compared to CML (2.5%), leading to higher arrears numbers.

Main Points

• The MLAR provides detailed insights into mortgage lending trends and risks.
• The data are used for regulatory oversight and financial stability monitoring.
• The classification of loans has evolved since 2016, with second charge lending now included in regulated lending.
• The reporting of arrears and possessions is based on loan account rather than borrower level, and uses a lower threshold (1.5%) for arrears.
• Securitisation is reported as un-securitised loans if the security is used as collateral for liquidity schemes, as no risk transfer has occurred.

Conclusion

The MLAR is a critical tool for understanding the performance and risks within the UK mortgage market. It provides a detailed and structured overview of lending activities, arrears, and possessions, with evolving definitions and thresholds that reflect changes in regulation and market practices. The data are essential for both the PRA and FCA to monitor financial stability and ensure compliance with regulatory standards.