Planet Funds

The current credit situation should not hamper individuals attempting to get a self-cert mortgage.

While borrowers are encountering tighter lending conditions in other money markets, Andy Pratt, spokesperson for Alexander Hall, reports little change in the self-cert market.

Nonconforming lenders in the subprime market have taken the brunt of the problems in the financial markets, according to Mr. Pratt.

The broker representative expects that borrowers with good credit will not experience problems in securing loans, as the high street banks are not seeing a negative impact.

Mr. Pratt says that borrowers who qualified for a self-cert loan in the past should not have any trouble now.

Data provided by the Economic and Social Research Council suggests that of the 29 million Britons working today, 13 percent are self-employed, making them qualified for a self-cert loan.

Britain’s mortgage borrowers could pay more due to the Bank of England’s decision earlier this month to leave interest rates unchanged.

Because the bank failed to implement a .25 percent cut in rates, borrowers may pay an additional £105, according to Ray Boulger, broker for John Charcol. 

Negative news on the economy led many industry experts to predict a rate cut, according to Mr. Boulger, who believes a cut was in order.

Britons could see financial problems due to inflating prices, signaled in part by npower’s decision to increase ticket prices by 17 percent, says the financial expert.  He does point out, however, that the consumer price index has risen only slightly above the two percent target rate, and he expects the global financial situation will cause it to slow.

Mr. Boulger fears that if the monetary policy committee waits too long to reduce the rate, they may be forced to cut the Bank rate more deeply than would have been the case earlier.

Meanwhile, moneysupermarket.com predicts that more borrowers may turn to secured loans.

Nearly a million people are having problems making mortgage payments, and an additional 1.8 million say they have encountered difficulties on occasion, according to a Bank of England survey.

Experts expect banks will continue to tighten their lending standards in the face of the global financial crunch and many borrowers’ situation will grow worse.  In the last twelve months, homeowners have seen mortgage payments increase by £3.6 billion as interest rates ballooned. 

The Quarterly Bulletin, published by the Bank of England, reports that many people are being forced to cut expenditures and borrow additional funds.  Nearly 50 percent of those with higher interest rates will reduce spending while 10 percent have extended their mortgages or borrowed an additional sum.  To make their monthly mortgage payment, another 10 percent are working longer hours, either at a second job or overtime. 

The Bank conducted its survey in September, in the early stages of the financial crisis.  The situation has worsened since then.  Although the Bank announced a quarter-point interest rate reduction earlier this month, many lenders are failing to pass that savings on to their customers.

Renters, who typically have lower incomes than homeowners, are finding it even more difficult to repay their debts, according to the survey.  Twenty-eight percent of renters reported problems making payments “at least occasionally.”

The chief economic advisor for the Confederation of British Industry insisted that the nation’s economic fundamentals remain sound and that fears of a recession are exaggerated.  He suggested that the current slowdown appears more dramatic in the face of last year’s strong growth.