CML Says Mortgage Lending Will Half in 2008
The Council of Mortgage Lenders (CML) reported that mortgage lending could fall by half this year unless the Bank of England releases more money to the mortgage lenders.
Steven Crawshaw, the chairman of the CML, said the demand for property has decreased considerably nonetheless, “potential borrowing still significantly exceeds the industry’s collective capacity to supply funds”.
A large number of mortgage lenders were forced to withdraw mortgage deals and up the prices as result of the credit crunch, and according to Mr Crawshaw it will not get better unless lenders find a new source of funding.
Without attracting new funding sources we will see an ongoing process of attrition in mortgage choice - possibly over a protracted period - with lenders managing down demand by tightening lending criteria, increasing price, or withdrawing more products from the market altogether.
This is not lender specific but across the piece - large and small; specialist and mainstream; Plc and mutual.
Yesterday the Bank of England cut the base rate by 0.25 per cent, which was predictable, is spite of this many lenders have increased their mortgage interest rates.
Last week, First Direct became the biggest lender to withdraw entirely from offering new mortgages, and several small building societies have also been forced to close their doors to new business.
Many lenders have also tightened criteria, pulling 100% mortgages and making their best deals available to those with the largest deposits.
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