Credit crunch hits smaller mortgage lenders
Over the last few weeks we have seen more changes in the mortgage market time than ever before. Denise Harvey, mortgage analyst from moneyfacts.co.uk, looks at what has been going on.
“It seems that there is no stopping it. Over the last two weeks, lenders have been even more ruthless in withdrawing products from the market and/or tightening their criteria. Over the last month alone we have seen the number of mortgage products available across residential and buy-to-let plunge from 7726 to 5700, a staggering drop of 2026 products.
“Until a couple of weeks ago it seemed that smaller building societies had escaped the worst. By funding their lending through deposits, they appeared to be immune from the problems facing the money markets. The last two weeks, however, have shown a very different story.
“Instead of increasing rates or tightening criteria, the smaller building societies such as Bath BS and Tipton and Coseley BS have either been withdrawing their products from the market completely or restricting their lending to direct business or local areas.
“Due to larger institutions increasing rates and becoming more reluctant to appear competitive, smaller lenders have seen an increase in demand; something they neither want nor can cope with.
“Traditionally, local building societies have attracted the majority of their business from the local area. In order to maintain presence and competitiveness in that area, they are having to close their doors to those from outside the region who are unable to secure a mortgage from the larger lenders.
Mortgage Lenders who have withdrawn their mortgage range |
Mortgage Lenders who have restricted their lending area |
Mortgage Lenders who have restricted their criteria |
Bath BS – range withdrawn |
Holmesdale BS – restricted to local area |
Coventry BS – max LTV within self-cert range now 65% |
Dunfermline BS - 100%, 105% & 110% range & 2 & 5 year fixed rates withdrawn |
Mansfield BS – restricted to direct business only |
Intelligent Finance – max loan to value within range reduced to 90% |
Bradford & Bingley – 100% range withdrawn |
Melton Mowbray – intermediary applications within 30 mile radius, direct applications within 50 mile radius |
Manchester BS – LTV reduced to max 60% on selected trackers and fixed rates |
Buckinghamshire BS – tracker rates withdrawn |
Newbury BS – restricted to local area |
Newbury BS – restricted max advance on discounts & trackers to £500K |
Earl Shilton BS – range withdrawn |
Tipton & Coseley BS – restricted to direct business only within local area |
Newcastle BS – reduced max LTV to 90% |
Mansfield BS – short term discounted rates withdrawn |
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National Counties BS – Max LTV reduced to 75%, min property valuation £125K |
Monmouthshire BS – range withdrawn |
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Standard Life Bank – Max advance on any application £500K |
Shepshed Bank – range withdrawn |
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Halifax – reduced max LTV from 97% to 95% |
Standard Life Bank – 2 year trackers, 2 year fixed, 2 & 3 year professional rates all withdrawn. 95% products within 3, 5 & 10 year range withdrawn |
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Bristol and West – All products for professionals withdrawn |
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Moneyfacts.co.uk – 26.3.08 |
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“Not only is this withdrawal of products shocking in itself, the speed at which the products are coming off the shelves has also been surprising. In one day we heard from 19 lenders that have made the decision to withdraw products or restrict criteria. Who knows what tomorrows news will bring?
“These changes show that no one has escaped the effects of the credit crunch this time. Whether you are a prospective first time buyer or an existing borrower coming off a deal, there will certainly be less choice out there, especially from the smaller building societies.
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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