Bank Continues Shrinking Business Loan Chance
With nearly three years past since the credit crunch that struck the United Kingdom so hard before spreading across the rest of the globe, business and home buyer lending continues to be quite constrained. Lending for what are termed high risk borrowers is also quite expensive according to recent reports coming out of the Council of Mortgage lenders and the Bank of England itself. From what the Trends in Lending report has shown in its latest incarnation, the Bank shows lending to businesses has fallen in April 2010 by 8 per cent since the same month in 2009. This is means businesses were unable to obtain a full £400m compared with what was available last year, a disturbing trend that could negatively affect consumers, as well.
Ministers have spoken out, including Vince Cable the Business Secretary, to ask banks to bring up their levels of support for businesses and continue to honour their lending agreements. Instead, banks have taken an even sharper interest in tightening their grip on capital and bringing their balance sheets closer to favouring themselves. To that end, mortgage lending has dramatically declined and the Bank has shown, along with the Council of Mortgage Lenders, that improvements in mortgage lending are slight at best, continuing to pale in comparison with past availability of proper funds.
The situation gets especially brutal for first time buyers who are met with extremely rigid demands from banks, including very high deposit levels of £30,000 or more. This is a major change from the £13,000 average required during past good times. This means first time home buyers are turning to their parents for financial help in record numbers, a full 85 percent turning to family in an effort to meet the sky high deposit demands. Those already in debt suffer further as they attempt to meet these demands to try to get their lives back on track.
Mortgage approvals, according to the Bank, have also improved modestly in terms of major lenders who offer funding for house purchases – nearly 3,000 more approvals in the month of May 2010 in comparison with the preceding month. However, this is down sharply compared with levels before the credit crisis which saw 49,000 more mortgages being made.
The bottom line ends up being that UK citizens will certainly want to attempt to pay down any debt they have before approaching lenders during these fragile times. Many are turning to IVA or similar debt solutions in order to bring their own personal debt levels under control.
