Credit crunch to hit mortgage markets even harder

Mortgage availability is set to get worse in the coming months with lenders warning they will lend less during the third quarter of the year than during the previous three months, the Bank of England said today. The Bank of England's Credit Conditions Survey found that a net balance of 47% of lenders had reduced mortgage availability during the three months to mid-June, with a balance of 22% anticipating further cut backs going forward. The main issue driving their reluctance to lend was the worsening economic outlook and house price falls, although the cost and availability of funds due to the credit crunch and a reduced appetite for risk were also factors. Default rates on mortgages rose by slightly more than lenders expected during the period as households struggled to meet repayments due to the economic downturn. Banks... [read full story]