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Borrowers will face even less choice in the mortgage market in the next three months, lenders have told the Bank of England.
They Bank's Credit Conditions Survey says lenders will put a further squeeze on the availablility of home loans until September, and the number of borrowers expected to default on their mortgages is predicted to rise.
The amount of unsecured lending, such as overdrafts and credit cards, is also expected to fall. The survey asks lenders to gauge what they have experienced in the previous three months and what they predict for the following quarter.
The tightening of the mortgage market over the past three months was partly owing to the fact that lenders expected house prices to fall, the Bank said. The Nationwide Building Society, one of the UK's biggest mortgage lenders, reported its eighth consecutive monthly fall in house prices this week. But the Bank of England predicted that the demand for home loans was also expected to fall in the coming three months.
The number of people defaulting on their mortgages also rose by more than lenders had expected in the past three months, the Bank said. There was more bad news for first-time buyers without significant savings, with mortgage suppliers expecting to ask for bigger deposits in the coming months, instead of putting up the cost of a mortgage.
Fewer than 4,000 different types of mortgage are now on offer, compared with more than 11,000 a year ago and the cost of these deals has been fluctuating for months.
2008-07-03 11:34:18 © Moneyextra.com
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