For many months now the UK has seen the mortgage sector experiencing increased difficulties, with lack of funding resulting in the inability to meet demand and increased cautiousness over who to lend to and how much business to take on.

As a result of the ongoing problems in the mortgage sector an increasing number of lenders have been taking various deals off the market, and this has resulted in the number of mortgage deals available falling from over 15,500 in July of last year, which was prior to the credit crunch taking a hold, to under 6000 deals, which means that the number of deals has dropped by two thirds in less than a year. This has seriously affected the ability of consumers to get finance, and as a result many of those looking to get a mortgage have been disappointed.

Officials from the Council of Mortgage Lenders have expressed concern over the problems that have hit the mortgage sector, stating that unless the government intervenes the problems will continue to get worse. One official stated: : “We have entered a substantially slower phase in the housing market and there will be ongoing problems in the mortgage funding markets unless the Bank of England makes new, broader based attempts to improve levels of liquidity in the UK. Demand for mortgages remains strong but cannot be fully met from existing funding.”

Those interested in taking out a mortgage are being advised to act as quickly as possible when it comes to making up their minds about a mortgage, as they could quickly find that the deal that they are interest in is no longer available or that they are no longer eligible to take out the mortgage due to lenders tightening up on their criteria. Originally it was thought that smaller building societies would not suffer the effects of the credit crunch in terms of mortgage lending, as their mortgages are mainly funded from savers’ deposits. However, in recent reports it has emerged that even these smaller lenders are feeling the strain, with many having to cut back on their lending and be more restrictive about who they will lend to.

The level of mortgage approvals in the UK has also slumped significantly, with mortgage approval levels down by a third compared to the same period last year. One official from the British Bankers Association said: “In an environment of tightening lending criteria, re-mortgaging, either to fix, re-fix, or reduce borrowing costs, has been a clear influence on mortgage data in the first two months of this year, resulting in mainstream lenders picking up market share.”

One economist recent said: ‘The modest pick up in mortgage lending in February . . . is unlikely to be sustained. Buyer enquiries have slipped back to the lows seen in the wake of the Northern Rock crisis and this trend is likely to persist through the spring. The recent sharp rise in Libor rates is indicative of the reluctance of banks to lend to each other and suggests that mortgage finance will remain in short supply for some time to come.’

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