The value of residential mortgages written off by banks and building societies in the last year has hit a 12-year low, research from peer-to-peer platform Lendy shows.

Bank of England data show that UK lenders wrote off just £72m of residential loans last year – 79% lower than at the same time in 2015/16 when £348m was written off, and even lower than pre-credit crunch levels.

• More : Mortgage arrears at lowest level in 23 years

Lendy says that the fall in the value of residential loan defaults reflects the current, relative stability of the UK property market, despite Brexit.

It adds that the large amounts of equity held within the average residential mortgage have also allowed lenders to recover more funds where defaults do take place.

However, Lendy says that property investors must be careful about the level of exposure they take on in case of a downturn in the property market, particularly with more rate rises expected in the near future.

Liam Brooke, Co-Founder of Lendy, commented: “Low interest rates have meant that bad debt in the residential market is close to all-time lows.

“However, investors can’t afford to take their eye off the ball now rates are starting to be pushed back up. Property will remain a sound investment, but portfolio risk must be managed effectively.

“Spreading risk across multiple properties and ensuring that loan-to-value ratios are sensible are vital safeguards. That’s where investing via P2P can help, enabling investors to diversify their property portfolios across a large number of investments with ease. Traditional property investing via buy-to-let forces investors to put all their eggs in one basket.”