Mortgages -
Cheap mortgages gone for good - 12/06/2008
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Royal Bank of Scotland boss Sir Fred Goodwin has predicted that cheap mortgages have had their day and that customers should not expect to find a cheap deal in today's climate.
"We are not going to go back to the days when money was freely available, everyone will have to pay more for their debt, including us. It's a universal feature,” he said.
He warned that banks will not be lending as much as they were in the past as they fear customers slipping into negative equity.
We will be looking more closely at affordability," said Sir Fred.
“And we'll be looking more closely at the size of loan compared to the value of the property and where that will be if prices come down. It is better people have their applications rejected than find out later they can't afford the mortgage.”
He predicted that house prices will fall again this year but that it need not be cause to panic.
"House prices have become very frothy in recent years - a five per cent fall would not be cause for alarm."
He went on to dismiss talk of a recession, saying that “We are seeing a slowdown but it's not the end of the world as we know it. I think it will stop short of a recession. Recession is a word that is often banded about but there have only been three since the war and this does not feel like one.”
“We still have very high levels of employment and people are still spending money - just not as much as a year ago,” he concluded.
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