The misery for home buyers as banks will do even more mortgage deals
- Mortgage lenders are preparing to hike rates and tighten their requirements
- A decline in home ownership and a winter job crisis could result in less affordable credit available
- Experts fear that this could mean the end of a “mini boom” in the real estate market
Borrowers will soon find it more difficult to obtain a mortgage as lenders prepare to hike rates and tighten home loan criteria.
According to a survey by the Bank of England, banks are preparing for a default in bad debts and a drop in property prices as a winter jobs crisis looms.
This means that less affordable credit becomes available as lenders try to bolster the reserves.
Experts warned that this could spell the end of a "mini-boom" in the property market after prices hit record highs in the summer.
Potential home buyers may find it more difficult to get a mortgage as lenders prepare for a rate hike
First-time buyers with small deposits were finding it almost impossible to get a loan when lenders pulled the plug.
However, the survey shows that nervousness is now spreading across the market, which could make it difficult for so-called second steppers to move.
It makes the Bank of England feel like it is introducing negative interest rates to encourage lending, which could result in the burden on savers to keep money in the bank.
This comes after lenders signed 84,700 mortgages in August, most since October 2007.
Average house prices also hit a record high of more than £ 224,000, according to Nationwide, as pent-up demand and the Chancellor's stamp duty leave sparked a frenzy of activity.
However, economists have repeatedly warned that the recovery could come to an abrupt end if unemployment begins to break down.
In September mortgage rates rose the most monthly since 2009, and the bank expects this upward trend to continue into the final quarter.
And while the number of deals available gradually began to recover from their lows, the survey shows that lenders expect them to decline again in the next few months.
Defaults are also expected to increase the fastest since the financial crisis. Sarah Coles, personal financial analyst at Hargreaves Lansdown, told Money Mail, “We can't necessarily say this is the beginning of the end because there are things the government could do to prop up the market, but it certainly looks not looking good. & # 39;
She added, “Real estate agents say it is already difficult to get a mortgage and it is difficult to keep a lender informed during the ups and downs of a move.
"With the market tightening and lenders becoming increasingly sensitive to house price movements, this could make life even more difficult towards the end of the year."
Andrew Montlake, Managing Director of Coreco, the mortgage broker, said: “We all know the economic problems that are in the mail, so it is no real surprise that banks are pulling down the shutters for those with smaller deposits.
What we need to avoid, however, is banks catastrophizing and dragging products into value for more resilient borrowers with lower credit.
"There's no sign of it yet, but storm clouds are gathering over the economy and the prospect of a short circuit could cause lenders to orbit the wagons."