Banks and building societies have warned the Bank of England they expect to be cutting secured loan lending - mainly mortgages - even more severely in the second quarter of the year than they did in the first quarter.
Growing economic uncertainty and the credit crunch is forcing lenders to reduce their risks whilst the wholesale cost of borrowing (the libor rate) has increased.
The Bank said: 'The reduction in secured credit availability was associated with a reduced risk appetite and increased concerns about the macroeconomy and the housing market.' The Bank of England also said that lenders expect to cut back on unsecured lending, which covers both credit cards and overdrafts, in the coming three months.
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