Property investment may be about to get more expensive as lenders concentrate on higher margins.
Sources of finance for
property investment are becoming more expensive for investors, as lenders start adjusting for low net interest margins owing to the low interest rate.
M4 lending fell by £18 billion in August, Bank of England figures show, equivalent to a growth rate decline of 0.6 per cent compared to 1.5 per cent in July.
The Council of Mortgage Lenders (CML) notes that the Bank's analysis makes it clear that the factors influencing this decline are complex.
Commenting on the figures, CML chief economist Bob Pannell suggested that this interest by lenders in improving their returns is actually good in the long-term.
He explained: "That lenders are seeking higher returns on new business is a logical response - even a desirable one - that should help lenders rebuild capital, improve investors' perceptions, and ultimately bear down on funding costs over time."
Mr Pannell noted that while the price of unsecured lending is moving upwards, secured lending costs are falling.
Posted by Pete White
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