Borrowing could get more difficult, warns Bank of England

The Bank of England has warned it could get even harder to obtain a mortgage as lenders are set to impose stricter criteria, asking buyers for bigger deposits.

The Bank’s ‘Credit Conditions Survey’ said lenders have tightened credit scoring criteria in the past few months and expects them to tighten further over the next three months. Lenders told the Bank that they are concerned about borrowers who put down less than a 25 per cent deposit and those who are self-employed.

The Financial Services Authority has already said it wants tougher checks made on those taking out interest-only mortgages. It has suggested a number of other radical changes as to how much people should be able to borrow. The Council of Mortgage Lenders has warned that this will reduce consumer choice, making it much more difficult for first-time buyers to get a mortgage.

Mortgage funds could be further restricted as banks prepare to repay the billions of pounds they received from the Government’s Special Liquidity Scheme. This could produce a funding gap, which will mean lenders have to keep funds back if the scheme is not extended or replaced.

But despite all these difficulties, a number of lenders continue to cut rates on their new deals. There are funding options available, with the private banks proving more suitable than their high-street equivalents for the right type of client. As always, it remains incredibly important to seek advice.

Speak to your usual Private Finance contact, or call us on 0800 980 8777 for advice on funding a purchase or remortgaging.