Credit squeeze hits mortgage lending

14-Jan-2008

Mortgage customers have begun to see the impact of the credit squeeze, new research has shown.

Figures from Moneyfacts.co.uk, the personal finance website, show that 11 mortgage providers have made adjustments to their lending criteria since December.

Specifically, loan-to-value (LTV) ratios have been cut as lenders become more risk-averse.

"Moneyfacts.co.uk has found that since the beginning of December 11 mortgage lenders have reduced the maximum loan to value they offer on some or all of their mortgage range," said David Knight, mortgage analyst at Moneyfacts.co.uk.

"This is an understandable about turn from the lending strategies we have witnessed over the last five years or so, when lenders pushed LTVs to highs of 130 per cent, with 95 per cent products considered the norm."

The credit crunch has encouraged lenders to take a more cautious approach, which could be bad news for people looking to buy their first property.

Despite talk of falling interest rates, credit is likely to remain more difficult to come by this year, leaving many prospective first-time buyers turning to parents, friends or shared ownership schemes.


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