Danny Lovey, of The Mortgage Practitioner, said that reduced lending capacity was no longer just an issue for the non-conforming market and had affected the prime sector as well.
He said that lenders were no longer able to rely on price to slow business, as they attempt to absorb the remortgage business coming from Northern Rock customers and to limit riskier lending.
Lovey explained: “Lenders have reached the stage where it is not just LIBOR that is pushing up deals.
“It is those with existing clients remortgaging that are experiencing problems because of the capacity issues of firstly the non-conforming, and now the prime market. Lenders cannot cope with it. Anything that is other than 100 per cent clean or straightforward is getting log-jammed.”
Richard Morea, technical manager for London & Country, commented: “This is pretty symptomatic of the market at the moment and why we are getting so many rate pulls. Lenders are struggling with funding and even if they put out a higher rate, they are still getting lots of business.
"The other way they are trying to slow business is by withdrawing from slightly riskier markets. But apart from that, there is very little they can do.”
