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Credit crisis shows its effect on mortgage business

Research by Moneyfacts has revealed that credit crunch in the banking system has hit the mortgage business hard with institutions withdrawing more than 10,000 deals since July 2007.

The number of mortgage deals has fallen from 15,599 to 5,725, with sub-prime and buy-to-let mortgages being the worst hit. The number of sub-prime deals has fallen by 81% to just 1,798, while buy-to-let offers slumped by 60% to 1,444.

The research has also found that lenders have raised the interest rates on some deals and are demanding bigger deposits for mortgages. A few small building societies have become very choosy in selecting their borrowers.

According to BBC News, big lenders, such as the Cheltenham & Gloucester, are demanding deposits worth at least 10% of a property’s value from the borrowers.