Mortgage freeze 'could last two more years'

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Mortgage freeze 'could last two more years'

Mon 29th Sep 2008

The mortgage freeze could last for another two years, according to a report by The Sunday Times.

Andy Mielczarek, head of lending at HSBC, told the paper that bank rates and Libor (the rate at which banks lend to each other) could drop over the next nine months.

But he added that the cost of capital for banks might not fall for another two years, which would affect their willingness to lend.

The Sunday Times said that Halifax had halved its mortgage range and cut the amount it would lend on two-year deals from 90 per cent of the property value to 75 per cent.

Rates were raised by as much as 0.3 percentage points, meaning a £200,000 loan could now cost £600 more.

Meanwhile, the BBC reported that three major lenders have upped their rates as turmoil continues in the banking world.

HSBC, Woolwich and First Direct have all raised their rates while other lenders are reviewing theirs.

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