Mortgage lending levels cut by a number of borrowers
In light of the expected slowdown in the housing market a number of lenders in the UK have reduced the amount of money that they are prepared to lend to potential property purchasers looking for a mortgage.
According to a recent report around eleven mortgage lenders have cut their lending levels as a result of prediction of a continuing slowdown in the property market.
The report claims that the lenders have cut their loan to value maximums on a range of mortgage products since December.
A number of studies, reports, and analyses have all pointed towards a current and continuing slowdown in the housing market, with falling house prices expected as well as reduced demand in some areas, in addition to some reports of fewer properties coming onto the market because of the costly and controversial Home Information Packs amongst other factors.
The report goes on to state that a number of lenders have now stopped offer 100% mortgages, where consumers can borrow the full value of the property without having to put down a deposit – something that many first time buyer relied on in the past because they had no equity from a previous property to put towards a deposit on a property purchase.
Some lenders have apparently stopped 100% mortgages to anyone that cannot provide a guarantor.
A variety of other mainstream lenders have reduced the amount that they will lend, cutting maximum borrowing levels from 95% of the property value to 90% of the property value on a variety of mortgage products.
One industry official said that the turn of events was understandable given the long period of 95% LTVs offered as a norm by most lenders, and considering that some lenders had been offering up to 130% LTV.
He added that the move came as no surprise taking into account the subdued housing market, the bleak outlook for the imminent future of the housing market, and the state of consumer debt within the UK.
Economists and analysts have predicted that house prices will either stagnate over the course of this year or will drop, although most do not expect the drop to be a highly significant one.