UK Credit Crisis

UK Mortgage News

Commercial Mortgage

Quick Enquiry Form Name Phone E-mail Enter security code

Towards the end of 2007 and into 2008 there have been quite drastic changes within the UK mortgage market. Many lenders have either withdrawn or strictly cut back on their adverse and high risk products or lending criteria.

This is due to a nervousness amongst banks to lend money to each other which as in turn reduced the liquidity of the market. So far Northern Rock has been saved from bankruptcy by the British Government, who intend to keep only low risk products and reduce the size of staff. America has seen Bear Stearns been offered out at a give away price by J P Morgan as it was on the brink of collapse.

The Bank of England has made billions available to lenders to try to aid the crisis and the US has seen the Federal Reserve rapidly cut interest rates in quick succession in order to stabilise a very volatile situation. World stock markets have also reflected the troubles in reduced index levels. This event occurred due to the American credit crunch after lenders were passing mortgage loans which are considered to be very high risk. These loans were then sold on to hedge funds, many banks then owned these funds.

Now that house prices have dropped these loans are becoming harder to service and repossessions are on the increase. This has had a ripple effect over to the UK. Though our lending criteria are lower risk compared to America and there is stricter regulation in place to control this. The out come has therefore been less dramatic than in America though time will tell the true impact.

To compact problems UK house prices have become very high and first time buyers are finding prices so high that many are struggling to buy. Prices have start to drop ain some areas along with lending levels. Lenders are often now requiring higher deposits along with high interest rates and mortgage fees.

0800 781 0414 Contact Us