Lenders' prudence likely to boost rental demand

07 2008
Millions of prospective first-time buyers look set to be further priced out of the property market as the nation's lenders get tough in the wake of the global credit crunch.

While the Bank of England has made two cuts to the base rate of interest over the past few months, these have yet to be passed on to consumers, leading many people to see the rental sector as the best option for the foreseeable future.

Just last week Halifax Bank of Scotland (HBOS) became the latest lender to announce that it is taking mortgages aimed at helping out would-be buyers off the market, stating that it is now targeting "prudent" customers, rather than those on low salaries or in flexible employment.

Commenting on the HBOS mortgage changes, Denise Blake, senior mortgage analyst at Moneyfacts.co.uk, said: "This move reflects the changes that we have seen over the last couple of weeks.

"Lenders have to balance out the risk they are taking on, so it's no surprise that Halifax are looking to attract the low-risk borrowers."

Likewise, First Direct has taken its entire mortgage range off the market, a move likely to further boost demand for rental accommodation across the UK. ADNFCR-1219-ID-18539711-ADNFCR

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