Large Loans Hit By Credit Crunch
Since the onset of the credit crunch, the ability of lenders to grant mortgages and home loans to individuals wanting high loan to value ratios and high income multiples has been dramatically affected, with most lenders restricting their criteria severely as they struggle with their own liquidity problems.
The limitations which have been imposed by loan and mortgage providers on customers have been well documented over the past few months, but it is not only the high loan to value deals which have been affected, another area of the market to be hit is the large loan sector.
The news comes as Nationwide, one of the UK’s largest lenders, became the latest mortgage and loan provider to announce that it was reducing the maximum loan size it was prepared to advance to customers by half, with a new a maximum loan limit of £500,000. A spokesman for Nationwide described the move as a “Prudent and sustainable way to manage its business during the current crisis.”
The latest figures from the Council of Mortgage Lenders (CML) showed that during the course of last year the large loan sector had increased by 29 per cent, but in the first quarter of 2008 alone, the number of new loans granted, in excess of £500,000 fell by 9.3 per cent, compared with the last three months of 2007.
These figures just go to show that it is not only the high loan to value and sub-prime sectors of the loan and mortgage market which are being affected, but also the high net-worth client area of lending.
Although the Nationwide has withdrawn from the large loan sector, there are still plenty of lenders who are quite happy to continue to participate in this area of business and loan providers such as the Abbey, HBoS and Cheltenham and Gloucester all continue to offer loans up to a maximum amount of £1,000,000 and will be more than likely to welcome the additional business from the Nationwide with open arms.
