Is Britain facing a second credit crunch?
After three years of financial stress, beleaguered Brits could be forgiven for thinking that the worst of the economic crisis has passed. However,
indications are that there could yet be more pain on the way for families across the country.
In a survey published by the Bank of England at the start of this month, lenders warned that mortgage borrowing could well become even harder to
obtain in the coming three months. This, said the banks, will be due to tighter conditions for wholesale lenders - the institutions that high street banks
This has highlighted already existing concerns that Britain might well be facing a second credit crunch. That prospect will bring a shudder to the spine
of anyone who struggled to get hold of a mortgage in 2008, when the availability of secured credit tumbled to an all-time low.
While lending conditions may have improved slightly since then, Bank of England figures show that mortgage approvals are still at around half the
numbers seen immediately before the crisis hit.
Indeed, the picture is looking increasingly grim for those attempting to buy their first home. The Council of Mortgage Lenders said only 35 per cent of
all mortgages lent in April went to first-time buyers - the lowest proportion since September 2007. This figure may well fall further if the availability of
credit does tighten yet again in the coming months.
So if you think you may need to take out a mortgage in the next year or so, what is the best plan of action?
With the prospect of further difficult times to come, Martin Bamford, chartered financial planner and managing director of Informed Choice, believes it's
important to do all you can to prepare.
"Look at your plans for the next year and consider the financing you might need," he says. "If you are going to need to borrow or refinance later this
year, it might make sense to do it now before lenders start to restrict access to borrowing even further in the coming months."
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