Borrowing Conditions Tighten
The credit crunch from last year is still impacting the readiness to lend from banks and building societies. Lenders are still being very strict with their criteria of who they will lend to and are avoiding the risker deals that were readily available 2 to 3 years ago.
Those with
bad credit requiring sub-prime mortgages are struggling the most. Even those with good credit history are having problems finding cheap mortgages, often having to pay larger deposits to get the
interest rates they require.
The Managing Director of Chase de Vere Mortgage Management says, "Lenders are being more cautious at both ends, restricting maximum LTVs and charging higher rates of interest."
Brokers say that the people who are least likely to be affected by the credit crunch are those who fall in the middle bracket of earners and credit history, who want an average loan or mortgage amount and have a reasonable amount to deposit.
In addition to buyers having problems, those who want to buy-to-let are also facing obstacles. Moneyfacts states that in a period last year almost 90% of buy-to-let loans were withdrawn for those with bad credit history.
Brokers say that they cannot see the attitude towards lending changing any time soon. Even if interest rates were to fall, they suspect the effect will not be passed on in full.
Tags:
credit crunch, lenders, banks, building society, bad credit, deposits