Why do mortgage lenders suddenly not want customers?

First Direct has, temporarily, withdrawn all its mortgage deals saying it has been swamped by applications. This comes after similar action from Nationwide and Cheltenham & Gloucester. The credit crunch is becoming a mortgage squeeze; the banks are repairing the damage done to their balance sheets by their involvement with sub-prime debt. They are focused on savers and are fearful of making a loss from lending to homebuyers.

So, is it now impossible to get a loan?

No, just much more difficult, unless you have considerable savings, or equity in your home. The outlook is bleakest for would-be first-time buyers without substantial deposits.

Oil is the key to world recovery

The shock of $140 oil has created inflationary and deflationary pressures that threaten world economy and policy tools

• Former President Bush energy adviser says oil is running out

Background

• Oil is the key to world recovery

• Banks may need to pump billions into scheme

• UK economic growth weakest for three years

Related Internet Links

• Full credit crunch coverage

Background

• Happy days are over for UK households

• Banks restrict mortgages by brokers

• Credit crunch halves lending at Nationwide

• JPMorgan to cut Bear Stearns jobs

• George Soros: Crunch will bite deeper in UK

Will I be able to remortgage?

Most banks are reserving funds for creditworthy customers who are remortgaging. All borrowers would be well advised to ensure that they have an impeccable credit record: late credit card payments will reduce your chances of getting finance.

What does this mean for property prices?

The shortage of funds will depress an already much cooler market. But although most economists are turning more gloomy, only a few forecast a slump. Malcolm Barr of JPMorgan predicts an upturn next year; others see improvement in 2010. In the meantime, the absence of first-time buyers will be felt keenly, especially since buy-to-let investors are now less eager purchasers of lower-priced properties. Prices are up to 10 per cent lower than last year.

Will borrowing soon get cheaper?

Unlikely. While there is hope of further base-rate cuts, lenders will not pass on savings.

What’s the best way to sell my house now?

If you need to move, set an asking price that will attract interest and act quickly. George Franks, of the London agent Douglas & Gordon, says: “If the seller takes three or four days to decide, the purchaser has often already found somewhere else.”

Is this a good time to sell up and rent?

Nick Leeming, of Propertyfinder, the website, says: “The average home has to fall more than 7 per cent in value before you break even once you take into account all the costs of selling, moving and then buying again.” Note also that rents are rising rapidly.

Should I even be thinking of trading up?

Selling and buying in the same market can make sense. Phil Spencer, television presenter and chief executive of Garrington Home Finders, says: “If you are selling a £500,000 house and prices have fallen 10 per cent, you may have to accept £450,000. But if you are buying a £1 million house, you will pay £100,000 less.”