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UK lenders become more risk-averse and limit mortgage availability

08 Oct 2014

The Bank of England's Credit Conditions Survey for Q3 2014 shows the sharpest contraction in mortgage availability since the financial crisis in 2008

The reduction was driven by lenders' expectations about house prices, and also lenders' response to recommendations by the Financial Policy Committee (FPC) to mitigate risks stemming from the housing market (in the FPC's June 2014 'Financial Stability Report', they recommended that banks reduce their exposure to the UK housing market in the event of a house-price crash)

Although lenders expect availability to increase in the fourth quarter, the contraction comes after eight consecutive quarters of expansion, and following recent news that UK house price rises are slowing (see here), will enable UK interest rates to stay at current levels for longer

For the full Bank of England report see here

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