Mortgage lending conditions 'to grow stricter'

The availability of affordable credit is likely to continue to fall over the coming months, one economic expert has said.

Vicky Redwood, UK economist with Capital Economics, said that credit card, personal loan and mortgage holders are unlikely to find it easy to secure funds in the near future.

Speaking before the Bank of England's decision to cut interest rates by 0.25 per cent was announced, Ms Redwood commented that residential and commercial mortgage borrowers may find themselves subject to more stringent conditions throughout the course of 2008.

Lenders will continue "requiring borrowers to have a bigger deposit than before if they take out a mortgage and then paying higher mortgage rates", she predicted.

And "the continuing problems in the money market" mean this trend should continue for a number of months, the economist said.

The Bank's Credit Conditions Survey for the first three months of the year revealed that lenders expected that secured credit availability would be reduced slightly more in the second quarter.

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