According to officials from the Building Societies Association the mortgage market in the UK could take another couple of years to rectify, and even then it will never be the same as it has been over recent years, where consumers found it pretty easy to get a mortgage whatever their circumstances, and where borrowing levels and income multiples offered by lenders were very generous.

Over recent months, since the global credit crunch made its way across the Atlantic, the mortgage market has been in chaos. Lenders have found it difficult and expensive to secure funding for their mortgage lending operations, and as a result of this have had to reduce the amount of business they take on by tightening up on their lending criteria. In addition to this many have withdrawn various popular mortgage products from the shelves, are demanding higher deposits from borrowers, have hiked up interest rates, and have increased arrangement fees.

Over recent weeks the government has launched a £50 billion mortgage rescue plan that will allow lenders to swap mortgage assets for government bonds. It is hoped that this will increase confidence amongst lenders, who will then start to lend to one another again thus improving liquidity in the mortgage sector.

With regards to this rescue plan one official from the BSA stated: “It will not in itself solve the credit crisis, it certainly isn’t going to reverse all the changes in lending policies we have seen in recent months, or restore mortgage lending to its former levels, but it should help to underpin confidence. It is vital for the Bank of England to remain very close to what is happening in markets, and it should not hesitate to intervene further and extend the facility if that is what is needed.”

Recent news:

• Even the government expects house prices to keep falling
• More help to be offered to homeowners facing repossession
• Estate agents at risk of problems due to mortgage and housing chaos
• Brokers complain over lack of access to mortgage deals
• Slump in lending levels fuelled by credit crunch
• Struggle continues for first time buyers

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