BRITAIN’s mortgage crisis deepened last night when the country’s biggest lender signalled it would become the latest to shut the door on potential home-buyers, adding to a dramatic drop in loans.
Halifax alerted mortgage brokers it was planning changes to its range, prompting warnings that thousands more buyers could find themselves unable to secure a house because of the global credit crunch.
The scale of the vanishing mortgage market was
laid bare yesterday by Bank of England figures which showed the number of mortgages approved dropped to 73,000 in February – down 39 per cent from the same month in 2007 – while experts said the number of different mortgages available has fallen by nearly 40 per cent during the past month.
Moneyfacts, a finance website, said there were now just 4,794 different products available on the market, down from 7,726 at the beginning of last month, bringing mortgage lending to its lowest level for 13 years.
And there are fears consumers are returning to unsecured debt, such as personal loans and credit cards, to meet higher out- goings.
Earlier this week, First Direct temporarily withdrew its mortgage range from all except existing customers.
The Bank of England said house-purchase approvals for February were only slightly higher than in November 2007 and almost as low as the 69,000 approvals in June 1995 – the lowest since current records began in April 1993.
The crisis has been prompted by a tightening of lending amid fears of a house-price slowdown.
Vince Cable, the Liberal Democrat treasury spokesman yesterday claimed three million UK households could find themselves in negative equity within a year as a result of the global economic turmoil, warning there were early signs that repossession rates were approaching the levels experienced in the recession of the early 1990s. The fears could be justified as the Glasgow Solicitors’ Property Centre (GSPC) yesterday reported that house-price growth slowed sharply in west-central Scotland in the first quarter of this year to 2.8 per cent, from 10 per cent at the same time in 2007.
The Halifax is understood to be receiving much higher volumes of business than normal, and more than it can cope with.
Ray Boulger, senior technical manager at John Charcol, an independent mortgage adviser, said: “It is very probable that Halifax will pull at least some of its products imminently. The fact that Halifax has not changed its products for a week is itself a sign that it is due for a change.”
Bank of England figures also showed a total of 246,000 mortgages were granted in February this year, and the majority, 111,000, were remortgages rather than purchases.
Quiet mortgage marketing was combined with a surge in consumer credit being taken out in February through overdrafts, unsecured loans and credit cards. The Bank said this jumped to £2.35 billion, its highest level since October 2002 and much greater than £0.9 billion the previous month.
Credit-card debt went up by £350 million and bank loans and overdrafts soared by £2 billion in February. It was the highest monthly increase since records began in 1987, according to the Bank of England figures.
People are thought to be taking on more unsecured debt as they cannot raise equity through remortgaging, and because of increasing expenditure, including utility, food and mortgage bills.
Louise Cuming, head of mortgages at
moneysupermarket.com, said: “We expected this to happen. We’ve not been able to place mortgages for people as lenders are declining them, but we’ve seen no slowdown in applications for credit cards.”
The issue of fewer lenders and tougher criteria will also be exacerbated by 1.4 million people in the UK coming to the end of their fixed-rate deals this year.
The full article contains 644 words and appears in The Scotsman newspaper.
