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Mortgages rationed

Lenders rationing mortgages

The British mortgage market is expected to continue to shrink next year, with the number of homeowners paying off their loans expected to outweigh the number of new loans taken out.

The director general of the Council of Mortgage Lending, Michael Coogan, has admitted that the government's demand for home loans to return to the levels seen in 2007 is not likely to be achieved. This announcement comes despite the government pumping £37bn into banks. Coogan believes a more realistic goal is to maintain lending next year at the levels seen in 2008.

Michael Coogan has called for the government, the Bank of England and the FSA to take further action to kick start lending.

Hopeful homeowners not reaping benefit of falls in interest rates

Mortgage lenders are doing their best to prevent customers from taking advantage of the drop in interest rates.

Many lenders have removed their tracker mortgages in fear that the interest rates will fall further from their current level of 3%. The cheapest mortgages around now require a 40% deposit on the mortgage, which for many first time buyers is near impossible.

Merging banks agree to help small businesses

Lloyds TSB and HBOS which are in the process of merging have pledged to help small businesses.

The merging banks have agreed to provide packages to help small businesses cope with the increasingly challenging economic environment. The measure due to be put in place include a commitment to linking borrowing rates to the Bank of England base rate. They have also promised not to alter overdraft terms during a company's agreement and have agreed to host business advice seminars around the country.

These announcements come after increasing pressure from the government for banks to provide more help to small businesses.

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