Franky on Finance

Several small building societies have been restricting or halting lending as a result of the financial turmoil.  With lenders’ funds drying up, higher deposits are being demanded from first-time buyers.  The Co-operative Bank now demands a higher deposit by cutting its maximum loan-to-value ratio from 95% to 90%.  Bigger lenders, such as the Halifax and the Woolwich, have slightly increased the interest rates on certain tracker or fixed-rate deals, while making other deals available only to those able to put down a 40% deposit.  The Cheltenham & Gloucester, part of Lloyds TSB, has also raised the interest rate charged on some deals.  More than a million fixed-rate deals, typically lasting for two years, are due to expire in 2008, which will add to demand.  As a result, the smaller building societies are withdrawing deals instead of being swamped by demand.  Those wishing to move house are being told to act fast on mortgage deals as lenders are changing their deals frequently, sometimes several times a week.