12 Oct

Credit crunch prompts 'tightening lending conditions'

Credit crunch prompts 'tightening lending conditions'

The worldwide credit crunch is prompting banks to tighten up lending criteria for sub-prime mortgages in the UK market.

According to figures from mortgage broker the Mortgage Lender, the tightening of lending conditions is so stringent that had they been applied in August, a quarter of sub-prime mortgages that were accepted would have been turned down.

David Titmuss, managing director of the Mortgage Lender, said: "A mortgage taken out in August by a customer in our sector – people who have a poor credit history - will now cost from £60 to £200 a month more.

"Lenders are also tightening up on 'affordability', which is calculated from disposable income. With the higher rates even fewer people will get a mortgage - that is above and beyond the 25 per cent of applicants who already do not meet lending criteria."

Mr Titmuss added that the credit crunch is likely impact deleteriously on the economy, and in turn the property market, yet further in the coming months.

He said: "We believe that the potential impact upon the economy may be considerably more than most commentators have stated.

"There will certainly be even more home repossessions, and the overall result will be a fall in house prices as the money to buy them simply contracts."

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