The global credit crunch has been affecting the UK’s money markets for some time now, and according to a recent report it is still causing chaos and turmoil in the loans sector, with an increasing number of lenders having to make radical changes in order to cope with the effects. Over recent weeks a number of lenders have taken products off the market, restricted lending, changed lending criteria, and raised interest rates, all of which has made life more difficult for consumers that are looking for loans.
Interest rates on personal loans have been rising, according to recent data, and a number of sub-prime mortgages have disappeared from the shelves, restricting choice and accessibility for those with damaged credit. First time buyers are being hit hard by the credit crunch too, with an increasing number of lenders looking for higher deposits from mortgage borrowers in order to get competitive rates – something that is notoriously difficult for first time buyers with no equity from a previous property.
Over the last few days there have been announcements from various lenders with regards to the withdrawal of some products and increasing interest rates on others.
One industry official said: “The latest withdrawals from the market have come in what appears to be a second phase of tightening. Lenders are facing up to the reality that things are not going to get better in the near future: in fact, it seems that there is more blood on the carpet yet to be spilt. Although growing numbers of borrowers are set to slip into sub-prime status, the market shows no signs of being able to satisfy this heightened demand.”
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