CROYDON is the UK’s number one hotspot for high-risk mortgage lending, research shows.

In 2017, 463 risky mortgages were taken out by residents of the south London town, up 11 per cent from 419 the previous year.

This compares with the UK average of 39 risky mortgages per area, according to the study by Lendy, the peer-to-peer secured property lending platform.

Walthamstow, with 421 risky mortgages, came next on the list of the UK’s high-risk mortgage hotspots, followed by Wandsworth (363), Streatham (322) and Tooting (319).

Read more: Lendy queries bank tactics as “high risk” mortgages soar

In sixth place, Brighton ranked as the highest area outside of London for risky mortgages, at 313. Hove (296), Battersea (296), Farnborough (294) and Wimbledon (276) made up the rest of the top 10.

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.

Lendy suggested the number of high-risk mortgages in Croydon reflects the turnaround in its reputation from one of the least glamorous parts of London to one of the hottest areas in the capital’s residential property market.

Croydon was the only area in south London that saw house prices rise in the year to February.

Read more: Bank warns on higher-risk mortgage lending

Overall, the number of risky mortgages in the UK jumped by 15 per cent last year, with 101,380 approved by banks.

Lendy warned the increase in the number of risky mortgages to residential purchasers means that even less funding is available to property developers.

Liam Brooke, chief executive of Lendy, said: “Banks are still piling into the owner-occupier market and choosing to lend more to risky mortgage borrowers rather than property developers. 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.”

Read more: Lendy loanbook hits £400m as banks withdraw from development finance