Banks expect to reduce mortgage lending

Last Modified: 03 Jul 2008 Source: ITN Mortgage availability will continue to fall as lenders tighten their criteria in the face of rising defaults, the Bank of England has said. The Bank of England's Credit Conditions Survey found that a net balance of 47 per cent of lenders had reduced mortgage availability during the three months to mid-June, with a balance of 22 per cent 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 also said losses on... [read full story]