Mortgage Availability Planning on Being Scarce in the Near Future
Mortgages will become less available in the weeks and months to come, according to Ed Stansfield, chief property economist at Capital Economics. Banks are currently lending under a different set of criteria than before the crisis. They also know there exists a vulnerability with first time home buyers and those applying for a remortgage which didn’t exist before the crisis. Basically, the rules of the game in mortgage lending have changed and wont be back to normal again for quite some time.
Stansfield discussed the Bank of England and how it views lending, and said the Central Bank identifies what trends the financial service providers expect to see form, over the upcoming quarter. The Bank has taken that information and formed a temperament for how lenders and other financial service providers will be affected for the next few months. From what its seen, the Bank of England has a clear goal of making funds difficult, or at least challenging to obtain for property. As far as the entire housing market is concerned, making funds more challenging to obtain, means shutting out many first time buyers from entering the property market. The Loan to Value ratio for these buyers would just be too high to come up with. Stansfield remarked on the current status of the market for first time buyers, saying: "The real problem in the mortgage market at the moment isn’t the cost of funds, but the access to funds. "People, particularly at the less creditworthy and younger first-time buyer end, are struggling."