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Losses due to credit crunch made up on all new mortgages

21/02/2008

High street banks explained that their profits for 2007 were much lower compared to 2006. Investigators show how banks are making up losses through different mortgages.

Banks are demanding the highest margins on all new fixed-rate mortgages. Cancelled property deals and discounts of at least 10 per cent on asking prices are causing more profit losses.

Major losses on sub prime mortgages have forced lenders to concentrate on shoring up their status.

Economist George Buckley commented: 'On the face of it, banks are having to charge exceptional margins on their mortgage lending right now. But this is not actually a sign of strength in the banking sector. They simply cannot source sufficient money to lend on to their mortgage customers through normal channels.'

Bank of England, Kate Barker suggested on Monday, that mortgage by market could get expensive.

The Council of Mortgage Lenders results indicated a small increase in lending last month, however Michael Coogan stated that they feel lending volumes to be less in the following months.


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