Home buyers could face tighter credit scoring rules in 2012 according to a recent report from the Bank of England.
An uncertain economic outlook coupled with a predicted fall in house prices could make it more difficult for buyers to obtain a mortgage as lenders brace themselves for another tough year.
In its quarterly report on lending activity in the UK The Bank of England said:
"Factors such as the cost and availability of funds, the economic outlook and expectations for house prices were all expected to pull down on credit availability,"
First-time buyers could be left worst off as those seeking high loan-to-value mortgages will feel the biggest burn, according to the report.
It's not all bad news though with a predicted increase in credit availability for those able come up with a deposit of 20-25% or more of the value of the property.
Other positive predictions for the coming year include increased innovation in the market leading to an easing of burden on some potential buyers. The report explains:
"Lenders commented that the small expected increase in credit availability reflected planned product innovation. For example, lenders planned to launch schemes allowing them to offer higher LTV mortgages by taking collateral from house builders such that lenders' risk profiles remained broadly unchanged."
In a statement coinciding with their own forecast for 2012 released last month, Council of Mortgage Lenders chief economist Bob Pannell commented: "Despite the fact that activity levels have already been subdued for several years, we have pencilled in a broadly flat picture - for both mortgage lending and property transactions - at least until real incomes show signs of stabilising as inflationary pressures recede.
As a by-product of sovereign debt worries, lenders face challenging conditions in wholesale funding markets, and these could have negative effects on the cost and availability of UK residential mortgages through some or all of next year. But, if European leaders navigate a comprehensive and sustainable way through Eurozone problems, current financial market stresses could heal - and the previous pattern of gradual improvement in cost and availability of funds re-emerge - relatively quickly. This in turn could have a major benefit on UK growth prospects, and boost household confidence and appetite to borrow."