Arab Press

بالشعب و للشعب
Friday, Aug 22, 2025

Britain's banks turn cyber sleuths to crack £75 billion mortgage mystery

Britain's banks turn cyber sleuths to crack £75 billion mortgage mystery

That is the type of question British banks are asking as they try to work out whether borrowers owing some 75 billion pounds in home loans will be good for it when a payment holiday, introduced when the coronavirus crisis first hit, ends.

Lenders are scouring current account transactions, credit card spending and trends in Internet searches for clues about customer finances as part of a wider effort to understand the damage to their portfolios from the pandemic.

The once-in-a-lifetime mix of economic shutdowns, unprecedented government support and an uncertain path to recovery have upended old risk models, based on historical data, necessitating a more dynamic, forward-looking way of analysing lending risk. The searches involve pouring over anonymised data and are a way of surveying overall risk rather than individual customer habits.

The stakes are high: underestimate the risks and bank bosses and shareholders could be in for a nasty jump in losses, overestimate them and banks could rein in lending when it is needed most.

Executives at Britain’s top banks say calculating the hit to loans, from mortgages to corporate debt, is the biggest risk management challenge they have seen since the 2008 crisis.

"This time there is economic volatility beyond what we have ever seen, there is unprecedented government support, and to try and model it all with 100% accuracy is impossible," said Matt Waymark, director of finance at NatWest Group NWG.L.

Some 300 billion pounds in payment breaks were granted on British mortgages, part of a series of measures aimed at propping up households hit by the virus, and around 70-80% of those have resumed payments, bankers and analysts told Reuters.

That leaves nearly $100 billion (77.2 billion pounds) outstanding at a time when banks also face wider defaults on their corporate loans and plunging income due to near-zero interest rates.

That is a small proportion of the £1.5 trillion in mortgages outstanding in Britain, but a big default on that stock of home loans coupled with an expected rise in defaults on corporate loans could see bad debts rise from 1.4% of their books to 4.1% by 2022, analysts at ratings agency Moody’s said.

That would be higher than the peak rate recorded after the 2008 crisis, of 3.96% in 2011.

The first real test is expected to be in the fourth quarter of this year, when the government’s furlough job support ends along with various business loan schemes.


UNPREDICTABLE THREATS


Government supports have so far meant there hasn’t been much of an increase in bad debts. The challenge in working out whether that will suddenly change is exacerbated by the fact that some customers not in financial difficulty took out payment holidays to pay down more expensive debt such as credit cards, leading to record levels of consumer debt repayment in Britain.

“We’ve seen very little so far in terms of actual defaults, whereas the models would’ve predicted a big hit following the recent economic dip, so the question is whether government support schemes are merely delaying the problem or actually mitigating it,” Waymark said.

The question is particularly pressing for British banks because of the speed and scale with which the scheme was put in place in Britain and then taken up.

Some 30% of British mortgages repackaged into bonds were in a holiday payment scheme, compared to 5% of French mortgages and 10% of Spanish home loans, according to data from S&P Global.

The pressure to understand the risks has meant banks in Britain are using data and technology in new ways and at a greater level of intensity than before, something that could be useful for modelling other unpredictable threats, such as climate change, according to Rishi Khosla, Chief Executive of OakNorth bank, which markets its portfolio diagnostics technology to other lenders.

It is accelerating a trend already apparent here before the pandemic of large banks mining customer data to boost revenue.

To check on the health of corporate borrowers, for example, banks have started using algorithms to scan news headlines for negative stories about particular companies and sectors so they can anticipate credit downgrades.

“I think there is a rising awareness that some level of forward look is important to complement standard risk rating approach,” Khosla said.

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Trump Backs Putin’s Land-for-Peace Proposal Amid Kyiv’s Rejection
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
United States Sells Luxury Yacht Amadea, Valued at Approximately $325 Million, in First Sale of a Seized Russian Yacht Since the Invasion of Ukraine
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Russia Formally Recognizes Taliban Government in Afghanistan
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Mediators Edge Closer to Israel-Hamas Ceasefire Agreement
Germany Seeks Taliban Deal to Deport Afghan Migrants
Emirates Airline Expands Market Share with New $20 Million Campaign
Robots Compete in Football Tournament in China Amid Injuries
×