The Bank Of England has warned to expect a credit squeeze, predicting that the contracting home loans market will shrink even further as credit conditions deteriorate over the next three months.
Another 2,972 mortgage products were withdrawn in March, reducing the number available to just 4,754 against the 13,000 available a year ago.
The Bank warns that tightening credit restrictions will have a full blown effect on business lending, shadow chancellor of the Liberal Democrats Vince Cable was quick to point out, “With lending now drying up there is a real danger this will have a serious impact on growth in the economy.”
The BoE reports that default rates for homeowners and business owners had shown a sharp increase since the start of the year and were likely to increase further.
Financial experts are expecting the Bank to respond to its own report and reduce the base rate this month.
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1 Bank Of England, Credit Squeeze Warning at Credit Reports on Credit Speak // Apr 6, 2008 at 5:17 pm
[...] Bank Of England, Credit Squeeze Warning The BoE reports that default rates for homeowners and business owners had shown a sharp increase since the start of the year and were likely to increase further. Financial experts are expecting the Bank to respond to its own report and … [...]