Banks across the UK are tightening their belts and making it more difficult for home owners to remortgage. Loan to value ratios are getting smaller and many are finding it difficult to get the loans that they need. At the same time however, remortgage rates are up as many try to avoid foreclosure. In total, applications for mortgages went down 34%, but rates for remortgages jumped up to 43%.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: “CML data released this morning provide clear evidence that the credit crunch is now having a meaningful impact on the availability of finance for home purchases. First-time buyers are very much under the cosh in this more hostile environment. While any increase in the stamp duty threshold in tomorrow’s Budget would provide borrowers trying to take their steps on the housing ladder with some assistance, the scaling back of lending activity is likely to limit the extent of any benefit.”
Rubinsohn also suggested that the housing market will not be recovering anytime soon, and fully expects a continued softening. The FSA is attempting to get more homeowners to remortgage before it is too late, but banks will need to comply if any effect is to be had on the market.
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