FTBs are struggling to get mortgages as cautious lenders withdraw and change their deals…

According to financial information service Moneyfacts, a string of lenders have tightened their lending criteria recently, which has led to FTBs struggling to come up with the higher deposits that are being demanded.

Small building societies have also been restricting lending as a result of the ongoing financial turmoil. The most recent example of this is the decision of the The Co-operative Bank to cut its maximum loan-to-value ratio from 95% to 90%.

Things seem to be getting worse and worse for FTBs, who already have to contend with rising prices, huge house price inflation and plummeting affordability levels. And the bigger lenders are not doing them any favours either.

Bigger lenders following suit

Bigger lenders, such as Woolwich and The Cheltenham and Gloucester have also increased their interest rates on selected deals, while making other deals available only to those lucky enough to be able to afford a 40% deposit. A spokesperson for the C&G recently stated: “We are taking this action to manage the high volume of demand for mortgages, caused by some rivals reining in their own lending”.

The market for specialist mortgages and sub-prime products continues to dwindle, with the West Bromwich Building Society, Mortgage Express and Nationwide also demanding bigger deposits from prospective buyers.

Ray Boulger, of mortgage broker John Charcol, commented: "Those wanting to move might find a mortgage they could have got six months ago, even a month ago, is no longer available to them. Lenders are changing their deals frequently, sometimes several times a week”.