- 08
- Apr
As the global credit crunch continues to bite, banks and building societies are tightening up further on their lending criteria making it increasingly difficult for borrowers to be approved for mortgages, loans and credit cards. The last remaining 100% home loan on the market is Abbey’s deal, which ends tomorrow and the Halifax are dropping their highest LTV rate to 95%.
With more and more financial institutions reporting profit results that show just how damaging the collapse in the US sub-prime sector and the resultant credit crunch really was, we are only now fully coming to terms with how damaging the credit crunch has really been and the squeeze is expected to continue.
The effects of the crisis are now fully apparent on high street lending with mortgage lenders withdrawing 40% of their sub-prime mortgages from the market as well as 16% of standard loans. Many of the standard loans which have been withdrawn were intended for first time buyers.
Over the past few weeks lenders have all but dismantled the 100% mortgage market, rates have gone up and good deals have disappeared.
Homebuyers are now at more risk than ever at losing the properties they are buying as mortgage lenders introduce barriers to lending at the last-minute. Convex Conveyancing, a legal firm, has found that problems between the time of exchange and completion have gone up by 10% in the past month. That type of problem was very rare in the past.
People who are having the most difficulty are mainly bad credit loan borrowers. Lenders have started to claim that not all the necessary paperwork has been provided after already approving the loan.
