Mortgage lending restrictions put in place by smaller building societies
April 8, 2008
A recent report has shown that the global credit crunch is also taking its toll with smaller building societies as well as larger banks and lenders, with a number of smaller building societies reporting that they have had to restrict their lending because of lack of finance to fund their lending. Many consumers hoping to get their mortgage through a smaller building society may be affected, and may find it increasingly difficult to get a mortgage.
Some smaller building societies have had to take a number of their deals off the shelves altogether. Many are finding it difficult to finance their lending. An official from one building society said: “Wholesale money is difficult to get and we have come to a standstill at the moment. We are hoping it will just be for a month, but we have taken on so much we have just run out of money to lend at the moment.”
Another smaller building society has had to stop accepting new applications unless they are from local consumers that meet their eligibility requirements. An official from the building society stated: “We were getting a lot of calls from around the country and we wanted to make sure that people locally can get them. Lenders are withdrawing rates and increasing them and limiting the percentage they will lend on. We are a bit loathe to do that and it is to make sure we don’t have to that we are restricting borrowing to people in our area.”
Like other lenders, smaller building societies have now had to make their lending criteria far more stringent, as they have to be careful who they offer their limited funds to. Many of those approaching these smaller lenders for mortgages may face disappointment.
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