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Bank warns of tighter mortgage market

2 July 2010

Homebuyers are likely to find mortgages harder to come by in the next three months, a new Bank of England report predicts.

The Bank's latest Credit Conditions Survey concludes that while availability of mortgages has risen since the end of the credit crunch, an anticipated tightening of wholesale funding could hve a negative effect.

People able to offer the largest deposits are most likely to see an increased choice of deals.

Demand for new home loans also fell slightly in the last three months, although the number of products on offer rose. However, the number of people wanting to remortgage rose for the first time since the end of 2008.

The average two year fixed mortgage rate is now said to be at its lowest level in seven years, as lenders try to compete with low standard variable rates.

The survey also reports a recent surprise fall in the rate of default on home and business loans, while predicting that the rate will level out in the coming months.

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