Loans and mortgages still inaccessible due to credit crunch

 

March 29, 2008

Industry professionals have recently stated that consumers are continuing to find many loan and mortgage deals inaccessible in the UK due to the damaging effects of the credit crunch in the finance sector. The credit crunch has had a profound impact on the financial markets, and due to its effects many lenders have had to look at taking some loans and mortgage deals off the market, as well as raising rates on some finance deals, and even restricting lending by making lending criteria more stringent.

There are some groups that are likely to suffer far more than others as a result of this situation. Those with good credit, and those with a substantial amount of money to put down on a mortgage, are likely to find things easier than those with damaged credit and first time buyers with little or no savings to put down on a property. A number of lenders have taken some or all of their sub-prime deals off the market recently, and are minimising on risk by refusing to lend to higher risk customers.

For first time buyers the news is also bad. Some lenders are now reserving their best rates for those able to put down a far larger deposit than the usual 5%, and this means that first time buyers with no previous property or equity either have to find a larger deposit – with some lenders asking for up to 40% - or have to put up with mortgage deals with the highest interest rates.

With regards to many lenders taking some of their mortgage and loan deals off the market, one official said: “The latest withdrawals from the market have come in what appears to be a second phase of tightening. Lenders are facing up to the reality that things are not going to get better in the near future: in fact, it seems that there is more blood on the carpet yet to be spilt. Although growing numbers of borrowers are set to slip into sub-prime status, the market shows no signs of being able to satisfy this heightened demand.”

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Written by admin · Filed Under Loans, Mortgages 

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