"Mortgage rationing improves, Bank of England warns"

From the BBC:

Home buyers will find it easier to by a house in future, the Bank of England says. Its quarterly survey of lending activity shows that lenders are going to be more sensible about prospective customers.

"Lenders expected an improvement of credit scoring criteria for granting new secured loans to households," the Bank said.

It said prospective purchers were worried about the poor economy but optimistic about falling house prices.

"Factors such as the cost and availability of funds and the economic outlook were all expected to help deflate the credit-fuelled house price bubble," the Bank reported, in its survey of credit conditions, "Lenders expected the proportion of reckless and purely speculative loan applications being approved to fall significantly over the coming quarter with some lenders commenting that they no longer included future windfall capital gains as part of households' disposable incomes and hence the affordability of taking out new secured loans will improve," the Bank added.

Banks and building societies told the Bank that this outbreak of commonsense had put off many house price speculators from applying for mortgages. Any increase in lending in the next few months, the lenders said, was likely to be concentrated on those borrowers who could afford to cushion banks against losses by putting down a large deposit; with a corresponding fall in highly leveraged speculation.