Thousands of borrowers could be reclassified

Tightening lending policies could mean that many borrowers could suffer in the coming months as fixed-rate deals end and more attractive deals become harder to find, mform.co.uk has advised.

The mortgage firm has said that as many as 60,000 households a month will be coming off fixed-rate products between now and next August, adding that many lenders will no now longer be prepared to take on borrowers looking to take out between three and four times their income.

The UK's increasingly large debt burden will play a significant part in the rejection of new borrowers, mform has suggested.

"With overall consumer debt rising, there has been a significant increase in the number of people struggling with making repayments, which means many will have damaged their credit ratings and now be seen as being sub-prime by lenders," advised Francis Ghiloni from mform.

The warning comes as the Mortgage Lender suggests that 25 per cent of those who took out bad credit mortgages in August would see their applications rejected were they to have applied this month.

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