| British mortgage lenders are beginning to batten down the hatches for an oncoming spike in unemployment. HSBC Holdings Plc, Barclays Plc and Natwest Group Plc have tightened restrictions on home loans for risky borrowers as officials unwind pandemic-support efforts. Then there's the renewed prospect of a no-deal Brexit, threatening to deepen what's already the worst recession in centuries. "Life could get very difficult," said Mick McAteer, a former board member of the U.K. Financial Conduct Authority and now a housing advocate. "I'm not sure people fully understand that we are just coming to the end of the 'emergency' phase of the Covid crisis." By moving to tighten mortgage lending, banks will dim one of the few economic bright spots since the pandemic forced a national lockdown. Home prices rallied the most in four years in August, driven by pent-up demand and cuts in transaction taxes.  A pedestrian walks past residential properties in London. Photographer: Hollie Adams/Bloomberg The headlines mask the looming risks in the wake of a fight for mortgage market share that led to looser home-loan criteria in the past three years. At one stage, one in six mortgage holders had paused their repayments. Regulators, meanwhile, say they don't know how much was loaned to those most at risk of losing their jobs in the downturn: workers in the booming gig economy. "Do they really know how much people borrow and to what extent this is risky? The answer is no, they don't," said Alla Koblyakova, a lecturer at Nottingham Trent University who studies the mortgage market. She was surprised to find that some borrowers spend 55% of their household income on home-loan repayments. Short interest in Lloyds Banking Group Plc, the country's biggest mortgage lender, reached 1.55% earlier this month, the most in almost 11 years, according to data compiled by IHS Markit Ltd. Short sellers borrow shares, planning to buy them back at a lower price and pocket the difference. Almost two-thirds of analysts that follow the company have a buy rating on the stock. Regulators are now telling lenders to add to their credit files the details of anybody taking a mortgage payment deferral or requiring other support. A surge in problematic mortgages will point to a difficult economic recovery ahead. | 
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