Money floods in but only a drop comes out.
Billions upon billions were pumped into the banking system and for some reason it appears lenders still don't want to lend money thus people can't buy property or develop what they have. Interest rate levels have dropped drastically trying to get lenders lending and consumers borrowing but to no end.
Self certification remortgages need the borrower to have a certain amount of equity in their property, this is usually at least twenty percent. Equity is the amount your property is worth minus the amount you owe. Interest rates are at an all time low and people are saving money by switching to a new low rate with some people paying much less a month in mortgage payments.
Self-certification mortgages do not require proof of a borrower's earnings and these have almost disappeared from the market. Banks no longer want to lend to customers who have no regular or reliable salaries and so are not as quick to lend as they were only a few months ago. It became clear that some borrowers were inflating their income in order to take out larger loans and the banks feared that these borrowers may now struggle to keep up repayments.
Banks are reluctant to lend due to the fact they are unsure of their position. There overindulgent lending of the last few years has been further compounded by lending on a self certification basis to borrowers, lending well in excess of 95%. Lending in this way is exceptionally risky due to difficulties in locating non risky clients who can show full proof of income and with a low loan to value mortgage. Difficulties in finding someone happy to lend 90% to 95% or 80% on a self cert basis has compounded the problem.
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