23
Oct
Banks 'to lend more in mortgages'
Lenders expect the availability of mortgages to rise in the
coming months as the outlook for the UK economy improves, a report
has said.
The projection comes after availability dipped in the third
quarter of the year, according to the Bank of England's Trends in
Lending report.
New mortgages became slightly more expensive in August with a
typical rate of 4.3%, up from 4.2% in July.
A lack of appetite for credit card borrowing and loans
continued.
Lenders said that they had not seen any increase in demand for
car loans, despite the pick-up in car sales driven in part by the
scrappage scheme, the report revealed.
People with a chequered credit history could also find it more
difficult to get unsecured loans in the coming months, with credit
scoring criteria expected to be tighter.
Regulation
The report pointed to recent data that showed a split between
mortgages for house purchases and remortgaging.
Lending to those buying a home continued to increase in
September, while remortgaging remained weak, the Bank said.
"As we surmised when we published our September gross lending
data on Tuesday, the new report confirms that September saw a
continuation of the two-speed mortgage market," said Michael
Coogan, of the Council of Mortgage Lenders (CML).
"But, also as we have highlighted, funding conditions remain
challenging, despite the encouraging signs of a slight thaw in
wholesale funding markets.
"Today's report very much confirms our own assessment of market
prospects - the most likely scenario is a slow and long, drawn out
recovery."
Earlier this week, the Financial Services Authority proposed
that regulation of mortgages should be tightened up.
Under the plan, lenders would have to verify every borrower's
income before agreeing to a home loan.
The Trends in Lending report also said that repayments
outstripped new lending to businesses in August, although this had
eased compared with the previous month.
"Anecdotal evidence is very much consistent with the notion that
there is more credit available to businesses, but that companies
are having to pay higher spreads and bigger fees," said Philip
Shaw, economist at Investec.
source: www.bbc.co.uk/news Friday 23rd
october 2009