Mortgage lenders are moving the goal posts for borrowers by increasing rates by as much as 0.6 per cent and withdrawing some of their most popular deals.
Leading high street lender Nationwide has announced that from today, the rate on all new fixed rate mortgages
will rise by 0.2 per cent, and its tracker mortgages
will increase by almost 0.6 per cent. The changes come as millions of home owners face re-mortgaging as their previously fixed rate deals come to an end.
But it is not just high profile lenders that are withdrawing deals and tightening their criteria; smaller lenders are also feeling the brunt of the credit crunch, according to Moneyfacts.co.uk. As larger lenders increase rates, smaller lenders have found themselves inundated with a demand for mortgages that they cannot cope with. Consequently, several smaller lenders have been withdrawing their mortgage products completely.
The speed at which mortgage products are being dropped is significant; "It seems there is no stopping it" said Denise Harvey, mortgage analyst from Moneyfacts.co.uk. "Over the last two weeks, lenders have been even more ruthless in withdrawing products from the market and/or tightening their criteria.
"Over the last month alone we have seen the number of mortgage products available across residential and buy-to-let plunge from 7726 to 5700, a staggering drop of 2026 products. These changes show that no one has escaped the effects of the credit crunch this time. Whether you are a first time buyer or an existing borrower coming off a deal there will certainly be less choice out there." Ms Harvey concluded.
The British Bankers Association (BBA) has recently announced that mortgage lending figures for February have risen to around £5.6 billion, but several experts believe this cannot be sustained. Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (RICS) said:
"The modest pick up in mortgage lending in February reflected in BBA data is unlikely to be sustained. Buyer enquiries (according to the latest RICS survey) have slipped back to the lows seen in the wake of the Northern Rock crisis and this trend is likely to persist through spring.
"The recent sharp rise in Libor rates is indicative of the reluctance of banks to lend to each other and suggests that mortgage finance will remain in short supply for some time to come." Mr Rubinsohn concluded.
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