BoE: Mortgage crunch ahead
HOMEBUYERS were warned yesterday by the Bank of England that it would be more difficult for them to obtain a mortgage over the coming quarter as lenders anticipated a tightening in wholesale funding market conditions.
Availability of secured credit had risen slightly in the three months to early June 2010, the Bank said. However, individuals’ demand for secured lending fell in the second quarter, confounding expectations of a property boom.
Household demand for unsecured credit was reported to have risen in the second quarter for the first time in over a year. “Together, these factors mean we could see unsecured lending begin to expand, following a period where it has remained broadly stable,” said Barclays Capital’s Varun Bhabha.
Unexpectedly, the default rate on home loans and loans to medium and large private non-financial corporations fell in the second quarter of 2010. “The combination of rising government debt piles, bank deleveraging and central bank tightening will drive a reduction in liquidity for many corporates. The risks of waiting to re-finance far outweigh the benefits,” said Ernst & Young’s Douglas Middleton.
BoE: Mortgage crunch ahead
HOMEBUYERS were warned yesterday by the Bank of England that it would be more difficult for them to obtain a mortgage over the coming quarter as lenders anticipated a tightening in wholesale funding market conditions.
Availability of secured credit had risen slightly in the three months to early June 2010, the Bank said. However, individuals’ demand for secured lending fell in the second quarter, confounding expectations of a property boom.
Household demand for unsecured credit was reported to have risen in the second quarter for the first time in over a year. “Together, these factors mean we could see unsecured lending begin to expand, following a period where it has remained broadly stable,” said Barclays Capital’s Varun Bhabha.
Unexpectedly, the default rate on home loans and loans to medium and large private non-financial corporations fell in the second quarter of 2010. “The combination of rising government debt piles, bank deleveraging and central bank tightening will drive a reduction in liquidity for many corporates. The risks of waiting to re-finance far outweigh the benefits,” said Ernst & Young’s Douglas Middleton.