Less Lending to Occur In Quarter 3
For the first time since the height of the financial crisis, banks and building societies expect to tighten lending. There will be a lot less lending so mortgages and remortgages will be harder to procure in the next quarter and probably for several to follow.
This warning came from the Bank’s Credit Conditions Survey. As the Budget cuts begin to effect the economy and consumers ready for the impact there is fear that there may be a large dip in economic activity. The survey showed 11.4 per cent of banks expect to lend less. Melanie Bien, director at mortgage broker Private Finance, said: "Just when it looked as though lending conditions were starting to ease, the Bank is warning we could face a second crunch. For those borrowers who are already struggling to secure mortgage finance, this is nothing short of disaster." Simon Rubinsohn, an economist with Royal Institution of Chartered Surveyors said: "The likelihood is that the finance for the property market will continue to be in short supply for some time to come." Analysts reported lending is available currently but definitely will tighten over the next three months and probably for an extended time after. Demand for secured lending for remortgaging was reported to have increased for the first time in almost two years in Q2. Only a small balance of lenders anticipate the demand for remortgaging to increase according to the Survey.