- 09
- Apr
The number of people being refused a mortgage has gone up by 60% in the past six months. Figures which were recently released show that almost 75,000 applications for new home loans were turn down by banks.
This could be seen as proof that lenders have started to listen to the Chancellor’s calls for more responsible lending. Recently banks and building societies have come under very heavy criticism from the Government for throwing money at borrowers who were than struggling to repay the loans. However, it is more likely down to the high inter-bank lending rate and poor availability of funds in the banking market.
Calls had come from the Financial Services Authority and the Bank of England as well as the Chancellor Alistair Darling for banks to stop lending money to people who couldn’t make the repayments.
Many borrowers are now coming into serious financial difficulty following last year’s rate rises and the global credit crunch which has seen banks seriously tighten up on their lending criteria.
Speculation is now growing that we may actually be heading for a property crash on a scale that has not been seen since the last crash in the early 1990s. Yesterday figures were released showing that March housing prices had dropped to their lowest rate in 16 years.
While the government has been busy blaming banks for the crisis, the shadow Chief Secretary of the Treasury is blaming the crisis on Labour Government policy which allowed a decade of easy lending which is now leading to major problems. However, American policy followed a similar trend, so Labour was not alone in thinking that consumer borrowing was healthy for the economy.
The Governments policies have also lead to a decade of record growth for the British economy and the Chancellor has claimed that the UK is in a much better position to deal with a housing crisis than it was back in the early 1990’s when the crisis was also followed by very high unemployment as a result of conservative government policy. Recent figures have shown that unemployment has recently dropped in the UK.
