Lenders issue strong warning over funds
MORTGAGE lending could fall by half this year without extra funding from the Bank of England, the Council of Mortgage Lenders (CML) warned yesterday.
CML chairman Steven Crawshaw said home loans could fall to half last year’s £108bn as banks and building societies struggle with more expensive funding following the credit crunch.
Mr Crawshaw, chief executive of Bradford & Bingley, said: “Potential borrowing still significantly exceeds the industry’s collective capacity to supply funds. It is, therefore, a real possibility, looking forward from today, that net lending in 2008 could reach only half last year’s level unless additional funds become available.”
A host of lenders have withdrawn mortgage deals in the past two weeks, with several increasing costs on fixed-rate deals. Nationalised Newcastle lender Northern Rock, which has cut back on its range of products, is to encourage many customers to seek loans from alternative providers when their existing deals come to an end.
Chancellor Alistair Darling has appointed former Halifax Bank of Scotland chief executive Sir James Crosby to head a working group on solving the funding issues.
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