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Credit crunch 'hitting small lenders'

Smaller mortgage loans lenders have been hit by the credit crunch, a financial website has pointed out.

Analysis from Moneyfacts.co.uk shows that small lenders, which were believed to be escaping the worst of the crisis, are rapidly withdrawing products and restricting who they allow to borrow from them.

Buy-to-let has been particularly hit, with total mortgage products dropping from 7,726 to 5,700 in the past month alone.

Mortgage analyst at Moneyfacts.co.uk Denise Harvey said: "Until a couple of weeks ago it seemed that smaller building societies had escaped the worst.

"By funding their lending through deposits, they appeared to be immune from the problems facing the money markets. The last two weeks, however, have shown a very different story."

Researchers have found that, in a single day over the past month, 19 separate small lenders decided to either restrict their loans criteria or to withdraw products altogether - a signal of the rapid rate of credit contraction on the British high street.

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