Yesterday the Bank of England in a surprise announcement said that a clampdown on the Funding For Lending Scheme was needed to cool the housing market. The cheap funding provided by The Bank of England will now be channelled more towards helping small businesses and away from the residential mortgage market.
What does this mean for those wishing to buy or re-mortgage ? It is obvious what will happen on two fronts, Firstly the cost of cheap money that lenders were enjoying will start to go up, this rising cost will be passed on by the lenders in the form of higher interest rates, so expect fixed rates etc. to start to rise in the new year. The other effect will be a reduction of available funds to lenders. This in turn will lead to fewer mortgages being available and a tightening of credit scoring to limit approvals.
I think we will have to wait and see to determine the actual effects, but mark my words this will have an effect on the mortgage market. Once again I must stress the importance of getting in early to avoid future disappointment.
Please watch this space for further news.