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Mortgage squeeze 'to get worse' Mortgage squeeze 'to get worse'
(10 minutes later)
The squeeze on the availability of mortgages is expected to continue in the next three months, the Bank of England has warned.The squeeze on the availability of mortgages is expected to continue in the next three months, the Bank of England has warned.
But it also predicted that demand for home loans was likely to fall slightly during the same period.But it also predicted that demand for home loans was likely to fall slightly during the same period.
The Bank, in its Credit Conditions Survey, said lenders expected the rate of homeowners defaulting to rise.The Bank, in its Credit Conditions Survey, said lenders expected the rate of homeowners defaulting to rise.
Mortgage lenders have been raising the cost and availability of mortgages in recent days owing to the credit crunch.Mortgage lenders have been raising the cost and availability of mortgages in recent days owing to the credit crunch.
Survey's finding
The survey confirmed that lenders had reduced the availability of mortgages in the three months to mid-March and "expected a slightly larger reduction" over the next three months.
But lenders are also expected to cut the amount of ordinary loans, not secured against property, in the next three months.
Small businesses were also expected to feel the squeeze, with a slightly smaller fall in corporate credit on offer.
Vicky Redwood, of Capital Economics, said the evidence increased the chances of the Bank's Monetary Policy Committee cutting interest rates next time.
"The outlook for economic growth has deteriorated enough to prompt a rate cut next week," she said.