Amidst the bad news, at last something positive.

Although mortgage interest rates are currently low, there is a real shortage of funds and a lack of desire by banks to lend to one another.

As a result banks have not wished to be overly competitive. They do not have enough money to get all the business they may want, and therefore instead have been very specific with the criteria on which they will lend.

If you have more business being offered to you than you can accept it means that anything which falls outside the criteria even slightly will be rejected.

A chunk of the additional funds being made available to Northern Rock will be to introduce some new 90% loan to value products. At this end of the market there are limited lenders. This has kept rates very high, since no lender wants to reduce their rate through fear of being swamped with business.

Even just one additional lender entering this market could be enough to give a boost.

This entry was posted on Tuesday, February 24th, 2009 at 5:58 pm and is filed under finance general, mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.