Home » Finance » Loans

Slowing Mortgage Market 'Could Impact On Loan Borrowers'

Oct 31, 2007
Last month's slowing in mortgage lending could spell bad news for borrowers, one firm has claimed.

Price comparison service moneysupermarket has asserted that the mortgage industry is shrinking - meaning that lenders are looking elsewhere to cut costs and increase profits, including in lending such as personal loans.

The company was reacting to the latest figures from the Bank of England, released yesterday, which reveal that net lending to individuals last month stood at 11.2 billion pounds. While the figure is higher than August - and exceeds the previous six-month average - the growth rate remains unchanged suggesting a slowdown in the sector. Annual growth maintained at 10.0 per cent, while the three-month annualised growth rate rose only slightly, by 0.1 per cent to 9.6 per cent.

Commenting on the figures, moneysupermarket's head of mortgages, Louise Cuming, remarks: "The Bank of England figures prove the mortgage industry is a shrinking market. The lack of growth is bad news for both the mortgage market and the economy as a whole. The credit crunch has made lenders increasingly risk-averse with many withdrawing higher risk products, for example sub-prime loans and high loan-to-value products. We have also been in a rising interest rate environment and both these factors have dramatically constricted the market."

Ms Cuming added that there were likely to be a number of side-effects from the slowdown in the mortgage market affecting those looking for personal loans or cheap loans. Firstly, the need to maintain profitability is likely to push up the costs of secured loans and other traditional products. This is because high-risk lending to the sub-prime market, prior to the credit crunch, had been a highly profitable "cash cow", she explained, with the interest revenue now needing to be raked in from other products. Additionally, personal loan lenders are likely to be cutting back on investment and staffing costs.

Furthermore, the number of best rate loans available is also likely to be reduced, with some sectors finding it increasingly difficult to source appropriate products.

"Consumer choice is being eroded as for some people there are few, if any, products available. Also, what is open to them will come with a significantly increased price tag. I fear we will start to see rising arrears and repossessions," Ms Cuming continued.

She concluded by reassuring consumers that eventually the market will regain stability and normality will return, but warned that in the meantime borrowing is likely to become more expensive and lessons will have to be learned about the risks involved in sub-prime lending.

Over the summer, the Council of Mortgage Lenders warned that while interest rates may have reached the peak in their cycle, consumers should not expect an easing in their financial situations any time soon. With the continuing demands of utilities bills, mortgage repayments and other demands on personal finances stretching affordability to the limit, pressure is likely to continue impacting on household budgets. The CML was reacting to figures revealing a slowing in the level of lending to first-time buyers, symptomatic of a wider slowing in the housing market.
About the Author
Tom Dawson writes for Essentially Home Loans where visitors can apply for secured loans online, we also specialise in bad credit loans for UK residents. Visit Today: http://www.essentiallyhomeloans.co.uk
Rating:
Please Rate:
(Average: Not rated)
Views: 146
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources