Are lenders cheapest mortgage offers at an end?

Lenders cheapest mortgage deals could be set to disappear as the UK enters a mortgage drought.

Santander and Lloyds TSB have already announced a cut to UK mortgage lending levels for 2012, and RBS has been accused of being reluctant to lend because its loans have been priced so high. Home-owners therefore could be left battling for the very last of the cheapest mortgage deals on offer.

Mortgage lending levels fell in April by 20 per cent from March levels and were the lowest on record for a year according to the Council of Mortgage Lenders.

If the number of mortgages on offer reduces, rates rise higher and lenders criteria tightens further this could be a lethal combination which could lead to a mortgage lending collapse.

First-time buyers could find themselves worst affected and once again locked out of the property market.

A restriction in lending comes as UK banks attempt to prop up balance sheets.

January this year saw an end to the Government scheme that helped banks to swap their risky debt for cash to fund mortgages. This has meant that much of the £185 billion which was once allocated to home loans is no longer available. New rules also demand that UK banks and building societies now have more funding from savers rather than from the money markets.

There are still some competitive deals on offer from smaller lenders such as the Post Office and the Yorkshire BS but these cannot fill the gap left by large high street lenders restricting mortgage supply.

Before the cheapest mortgage deals on offer disappear all would-be home-owners and existing borrowers looking for a new deal are advised to contact Deal Direct.

Contact Deal Direct and will source for you the most competitive rates on offer.