Due to tighter regulation on banks, mortgage holders will have to pay more for their mortgages. The tighter regulation is due to the credit crunch and in particular the financial crisis at the beginning of the autumn last year.
This was first anounced by Lord Turner the chairman of the FSA. Lord Turner said this increase in the cost of a mortgage could last up to 9 years.
The tighter regulation on banks is a good thing in the long run, but by forcing the cost of a mortgage up will help to fuel the recession further.
The banks that are partly owned by the government have been widely critisised by mortgage brokers and the public a like for not offereing better deals on mortgages. But many economists say that these changes and higher prices mortgages are necssary to build a strong and safe economy.
It’s always a bit of a balancing act with things like this as what is good for the long term can be painful in the short term. A poor houseing market now could in turn cause further job losses and an increased reliance on credit cards.
I think what we have to accept is that things will have to get worse before they can get better and that it is best to put in place long term fixes rather than short term plans which we suffer for later.