Thrifty Loans

Recent reports of credit card applications being turned away in huge numbers have not been official figures, but have been the results of various surveys. However, banks, mortgage providers and credit card companies are denying that they have actually tightened their lending criteria in the last few months.

Capital One, who have pulled out of Spain, France and Italy, say that they have not changed underwriting criteria, and that, if anything, their acceptance levels are up.

Lloyds TSB says its acceptance levels are up too, claiming they don’t refuse many applications as most credit card applications are from current account customers, about whom they know a great deal.

Although the squeeze on credit has led to a re-structuring of the sub-prime mortgage market, this in fact only represents 6% of the whole mortgage market, and other types of mortgage loan are just as easy to get as before the crisis blew up. The industry does admit that products have been restructured and retuned.

Lenders say that what is really happening is that consumers have tightened their own belts after the impact of five interest rate rises and falling confidence after the sub-prime crisis, Northern Rock and the credit crunch. Caution is the order of the day.

Most lenders say that no new obstructions have been raised to credit, apart from tweaks here and there. Norwich & Peterborough have pulled their 95% and 100% LTV loans, and Leeds building society asks for a guarantor for 100% applications. Elsewhere charges have increased on 100% applications.

It certainly seems that less applicants are proceeding with their loans, said to be a typical sign of a slowing market. Less activity in the market makes it tougher to complete chains, and some buyers are holding back to see what the market will do next.

As for credit cards, financial data company Defaqto, says there were more zero interest credit cards on the market in October than ever before. It seems that 0% offers on balance transfers are still popular with providers, rewarding disloyalty as ever. However, fees associated with balance transfers have gone up, and American Express, Goldfish and Marks & Spencer have increased their interest rates. These increases are seen by industry watchers as continuing attempts by credit card companies to recoup lost income from high penalty charges which are now capped at £12. They are still angry and continue to look for ways to re-boost their profits

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