UK lenders have withdrawn 40% of their mortgage deals in the past three months, according to the financial information company Moneyfacts.
UK lenders have withdrawn 40% of their mortgage deals in the past three months, according to the financial information company Moneyfacts.
Most of that has been due to the collapse of the market for sub-prime mortgages, with 54% of those policies being taken off the shelves.
Most of that has been due to the collapse of the market for sub-prime mortgages, with 54% of those policies being taken off the shelves.
But the number of mainstream mortgage deals has also dropped by 16%.
But the number of mainstream mortgage deals has also dropped by 16%.
Moneyfacts said lenders had become more cautious due to the increased riskiness of lending.
Moneyfacts said lenders had become more cautious due to the increased riskiness of lending.
"While a 16% drop may not sound much in comparison to the sub-prime market, within a historically static market this is certainly unusual and the reasoning much less clear cut," said Julia Harris of Moneyfacts.
"While a 16% drop may not sound much in comparison to the sub-prime market, within a historically static market this is certainly unusual and the reasoning much less clear cut," said Julia Harris of Moneyfacts.
"Northern Rock slashing its 230-plus product range to just 70 products has certainly played a role, as has the merger of Nationwide and Portman," she added.
"Northern Rock slashing its 230-plus product range to just 70 products has certainly played a role, as has the merger of Nationwide and Portman," she added.
Changing market
Changing market
The past few months have seen a distinct turnaround in the UK property market after house prices reached record levels of unaffordability.
The past few months have seen a distinct turnaround in the UK property market after house prices reached record levels of unaffordability.
Most surveys suggest that the housing market is now slowing in general, while the number of would-be borrowers is also falling, a fact reflected in a drop in the number of new mortgages being approved for house buyers.
Most surveys suggest that the housing market is now slowing in general, while the number of would-be borrowers is also falling, a fact reflected in a drop in the number of new mortgages being approved for house buyers.
Lenders are now a bit more cautious about lending large sums of money to people, particularly those with suspect credit histories, if there is any chance that the value of their houses might fall at any time in the next few years.
Lenders are now a bit more cautious about lending large sums of money to people, particularly those with suspect credit histories, if there is any chance that the value of their houses might fall at any time in the next few years.
"The rest [of the withdrawn deals] can only be attributed to many lenders making more minor changes to their ranges," said Ms Harris.
"The rest [of the withdrawn deals] can only be attributed to many lenders making more minor changes to their ranges," said Ms Harris.
"Some are withdrawing their higher risk products, for example those over 100% loan-to-value or their more specialist deals such as self-cert. Others are simply streamlining their ranges," she said.
"Some are withdrawing their higher risk products, for example those over 100% loan-to-value or their more specialist deals such as self-cert. Others are simply streamlining their ranges," she said.
Northern Rock
Northern Rock
The recent crisis at the Northern Rock, one of the UK's biggest mortgage lenders, has also led to a sudden change in the so-called sub-prime market.
The recent crisis at the Northern Rock, one of the UK's biggest mortgage lenders, has also led to a sudden change in the so-called sub-prime market.
It has almost dried up as lenders have found it difficult to borrow their funds in the financial markets to lend on as home loans.
It has almost dried up as lenders have found it difficult to borrow their funds in the financial markets to lend on as home loans.
This has been especially so for sub-prime buy-to-let mortgages, where the number of deals available has dropped by 72% since July.
This has been especially so for sub-prime buy-to-let mortgages, where the number of deals available has dropped by 72% since July.
In these sorts of deals lenders were taking an even bigger bet than usual, on both the credit worthiness of the borrower and the future value of the property they were buying.
In these sorts of deals lenders were taking an even bigger bet than usual, on both the credit worthiness of the borrower and the future value of the property they were buying.
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