Mortgage drought to tighten over debt fears

Banks and building societies are set to further tighten the screws on borrowers as a Bank of England survey revealed a growing reluctance to lend and surprise at the rising rate of customers defaulting on home loan payments. The Bank's survey on credit conditions showed that 47 per cent of lenders had cut mortgage availability in the three months to June while a balance of 22 per cent of banks expected further reductions in the future. Lenders said they had reduced the supply of credit because of their expectations for the housing market, the changing economic outlook, changes in their own appetite for risk and their own continuing difficulties in getting wholesale funding. Today's survey also revealed that lenders have been taken by surprise by the rate of borrowers defaulting on their mortgage payments. The numbers missing... [read full story]