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New lending rules cause mortgage availability fall

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The Bank of England has said mortgage availability has reduced 'significantly'

The Bank of England has said mortgage availability has reduced 'significantly'

The Bank of England has said mortgage availability has reduced 'significantly'

Mortgage availability shrank back "significantly" in the three months to early September following two years of continuous expansion, the Bank of England has found.

Lenders told the bank they have also become less willing to lend to people with deposits of less than 10% for the first time since the bank started asking them this question in 2013.

The fall in mortgage availability was reported by banks and building societies to be due to a changing appetite for risk as they got to grips with new stricter rules about the way they can hand out home loans.

Expectations about house prices, which have surged to record highs in recent months according to a string of studies, have also been a factor in their more cautious mood.

The bank's Credit Conditions Survey found that many lenders experienced "operational issues" as they put the new Mortgage Market Review (MMR) rules into action. This had the effect of pushing down on mortgage availability over the summer.

The rules under the MMR, which came into force in April, mean that lenders have to spend more time asking home buyers and people looking to remortgage detailed questions about their spending habits.

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