mortgagemoney.jpgThe mortgages industry has recently stated that there could be ongoing problems in this sector, with the effects of the global credit crunch taking their toll and affecting both lenders and consumers. Over recent months securing finance on the wholesale money markets and through inter-bank lending has become more difficult and more expensive for banks, and this has resulted in many having to cut back on their lending and strengthen their lending criteria in order to control lending levels.

A senior official from the Council of Mortgage Lenders recently called for authorities to take action to address this issues, stating: “We have entered a substantially slower phase in the housing market and there will be ongoing problems in the mortgage funding markets unless the Bank of England makes new, broader based attempts to improve levels of liquidity in the UK. Demand for mortgages remains strong but cannot be fully met from existing funding.”

Many consumers have struggled over recent months when it comes to getting a mortgage. Those with damaged credit have found that many lenders have had to take their sub-prime mortgages off the market due to lack of funding and increased wariness over risks. First time buyers have been hit with far higher rates of interest due to insufficient deposits, as well as finding restricted accessibility to 100% mortgages.

Many lenders, in particular smaller building societies, have recently announced that they are unable to lend to new customers, as funding is limited and therefore only local applicants will be considered. The various changes and withdrawal of products throughout the mortgage market have made conditions very difficult for consumers, and there are concerns over how the situation will affect those due to come off cheap fixed rate mortgages over the coming weeks.

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