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22 October 2007
The financial headlines in the UK have been filled with information about the effects of the global credit crunch of late. All financial sectors have been affected and consumers have found that accessibility to finance, particularly for those with damaged credit, has become more and more difficult. This has been further reflected in a recent report, which has shown how the level of rejections on mortgage loan applications has rocketed over recent months.
According to recent figures the last seven months has seen rejections on mortgage loan applications soar by nearly sixty percent. A combination of bad debt levels, higher inter-bank lending charges, and volatile financial markets, has seen most lenders really tightening up on mortgage lending, as well as on other loans, and this has made it increasingly difficult for many consumers to get a mortgage loan.
One industry expert commented on the situation, stating: "Life is tough at the moment if you're applying for a mortgage. The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection. Lenders, quite reasonably, do not want to take risks when there are pressures on how much people can afford, so it's up to the applicant to convince their bank that they can cope with the repayments."
Experts have also expressed concern that this level of rejections could lead to more and more people damaging their credit through making mass applications after being rejected. Industry official have stressed the importance of waiting before making another mortgage loan application after being rejected and avoiding making mass applications. This is because each rejection can damage your credit history and lower your credit rating, thus increasing the chances of getting rejected again and damaging your credit further if you make another application shortly after.
The turmoil in the financial markets has affected other sector of the loans industry too, with many lenders pushing up their interest rates on unsecured personal loans over recent weeks, and some lenders raising these rate by as much as four percent.
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