Mortgage lenders struggle to find to cash
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by Kay Mitchell
Following the impact of the credit squeeze, mortgage lenders are running out of cash. Figures from The Council of Mortgage Lenders showed Â£24 billion worth of mortgages advanced in February, 7% lower compared with the previous month and 6% down on the previous year.
Michael Coogan of the CML said problems in the money markets had left its members unable to meet demand, as they effectively ran out of money to lend.
Demand for mortgages remains strong but cannot be fully met from existing funding. This has led many lenders to reduce their product ranges, increase their mortgage prices and, in some cases, to reduce their lending capacity, added Mr Coogan.
As credit conditions change from day to day, lenders will continue to rapidly adapt their products and pricing to match. This is a vital response to the uncertain conditions, he continued.
We have entered a significantly 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, explained Mr Coogan.
Last week, the Bank of England injected Â£11 billion into the money markets in an attempt to combat the ongoing global squeeze on credit.
The UK property market is currently subdued and mortgage approval figures from the Bank of England for January showed a significant increase in the number of people re-mortgaging, according to the CML.
Demand is expected to continue throughout 2008 as around 1.4 million fixed-rate deals are due to expire this year.
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