Tighter lending criteria for mortgage borrowers

| September 30, 2010
”Tighter

In its latest Credit Conditions Survey, the Bank of England has reported that demand for house purchase mortgages fell slightly in the three months to early September.

In addition, lending criteria tightened slightly for the second consecutive quarter, with the trend expected to continue over the coming quarter.

Some lenders commented that the changes reflected a more cautious approach to the self-employed and those applying for higher loan-to-value (LTV) mortgages.

Furthermore, lenders are not expecting an increase in the availability of new mortgage lending over the next three months.

The previous four quarters have seen consecutive increases in the supply of mortgages with LTV ratios above 75% but further increases are not expected in the current quarter.

Finally, demand for remortgaging was broadly unchanged and banks and building societies said they expect demand to remain level through to early December.

Today’s low standard variable rates and homeowners who are unable to refinance because of the small amount of equity they hold in their properties were mentioned by some lenders as restricting the remortgaging market.

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