Restrictions on lending from smaller lenders

A number of smaller lenders have recently announced that they are cutting back on their lending, as they struggle to try and meet demand for finance on limited funds from the wholesale money markets. Lenders have been finding it notoriously difficult and expensive to secure finance to fund their lending, and as a result of this have had to be far more careful over who they will lend to and how much they can lend out to potential borrowers.

A number of smaller building societies have recently stated that they cannot keep up with demand for mortgages, and are having to make a number of cutbacks in order to avoid huge risks. Some of these lenders have had to withdraw a range of products from the shelves, and many have placed various restrictions on their lending, including restricting new unsecured lending on credit cards and also only taking on local consumers as new customers.

One smaller building society, the Tipton and Coseley, said that whilst they had a lot of interest in their product, they had to restrict new lending to local consumers only. An official from the building society stated: “We were getting a lot of calls from around the country and we wanted to make sure that people locally can get them. Loan lenders are withdrawing rates and increasing them and limiting the percentage they will lend on. We are a bit loathe to do that and it is to make sure we don’t have to that we are restricting borrowing to people in our area.”

Another official from a different small building society explained the problems that many smaller lenders were having, stating: “Wholesale money is difficult to get and we have come to a standstill at the moment. We are hoping it will just be for a month, but we have taken on so much we have just run out of money to lend at the moment.