Lehman Brothers collapse 'will hit UK mortgages'

16-Sep-2008

The collapse of the Lehman Brothers is likely to have a knock-on effect on the mortgage markets, it is suggested.

Financial advice website Moneyfacts asserts the events taking place in the American mortgage markets will impact the cost of British borrowing, as banks become increasingly wary of lending to each other.

This could affect first-time buyers as the website suggests mortgage markets in the UK could "seize up" again, despite the Bank of England providing additional cash.

A spokesperson said: "The longer the banks face an increased cost of borrowing, the more likely it is that UK mortgage customers will be hit."

They added it usually takes around two weeks for the full effect of such events to filter down to the mortgage market.

Earlier this month, before the Lehman Brothers crisis, the Council of Mortgage Lenders suggested tighter lending criteria is putting off would-be first-time buyers.

The body suggested falling house prices are also discouraging people from selling.

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