Reduced lending to come into force from buy to let lender

A specialist buy to let mortgage lender has confirmed that stricter regulations with regards to lending to new customers is due to come into force soon, with the credit crunch and financial turmoil in the money markets forcing the lender to have to cut back on new lending in order to focus on existing customers.

Paragon, which specialises in buy to let mortgages, will be restricting lending to new customers from the end of February. Officials from the firm state that the amount of money allocated to new customers loans will have to be cut until there are marked improvements in the financial markets.

Like many other lenders, Paragon has experienced a number of difficulties since the credit crunch wreaked havoc in the money markets, forcing lenders to cut back on lending and creating far tighter credit conditions. Inter-bank lending has become more difficult and expensive, and lenders have had to become increasingly careful with regards to who they lend to.

A number of lenders have announced that they will be cutting back on lending over the next few months, and where things will go from there will depend on how long the credit crunch continues to bite. In the meantime both consumers and businesses are set to feel the impact of the tighter credit conditions.