Loan Lenders Becoming More Stringent as Deposit Demands Rise

Mon, 10 Dec 2007

Borrowers looking for a new mortgage will find it hard to secure as good a deal as they have previously enjoyed, as banks tighten credit standards considerably. This week has seen the largest building society in Britain, Nationwide, increases their two-year tracker rate from 5.68 per cent to 5.83 per cent, and their mortgage rate is also up from 5.83 per cent to 5.98 per cent.

When taking out a new mortgage, borrowers are not only facing higher rates, but banks are asking for larger deposits and are also conducting more stringent income checks as they look to avoid having the sort of bad debts that have plagued so many banks of late. Banks’ concerns have been added to by the fact that house prices have fallen for three months in a row now. HSBC has doubled the deposit it requires on many of its mortgages, whilst average interest rates on a mortgage deal are over one per cent higher than they were two years ago.
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