Credit Crunch Hits Mainstream Markets

Shocking news report today says that 40% of banks and building society mortgage deals have been withdrawn. It seems that borrowing money to buy a property may be becoming more difficult, there is certainly less choice available than 3 months ago.

Many of the mortgage deals that have been pulled were aimed at those looking for homeowner loans with a bad credit history. It seems that with increased costs and reduced profits, banks and building societies who are struggling to raise capital themselves, are passing this onto the consumer.

Not just a sub-prime or buy to let problem now though, the mainstream sector is now suffering too. The increase in mortgage rejections shows that lending criteria is much tighter now - 1 out of every 3 homebuyers have had a mortgage application rejected over the past 6 months.

It is not just a lack of choice or rise in rejections but also an increase in interest rates if you do get the finance you require. This in turn will put a lot of people off applying for credit.

With the rise in interest rates it has been making repayments for some people a real struggle, and worrying reports have suggested that many have been using their credit cards as an emergency option for making their monthly payments. This is not very cost effective at all, it is actually one of the most expensive ways to do it and can only make matters worse.

We have been reliant for so long on cheap rates, lots of offers to choose from and easy credit. Now it seems we are seeing the full consequences of these actions.