Consequences of Lehman collapse will ‘show in next few weeks’

The effect of the collapse of US investment bank Lehman Brothers on the UK market will begin to show over the coming weeks, an expert has claimed.

Mortgage specialist Darren Cook from Moneyfacts has claimed that the fallout from the bankruptcy will “inevitably” affect rates in the UK – which could contribute to higher debts for homeowners.

“Lenders are focusing much more on risk. They are making less products available to borrowers with a small deposit and making the few that are available much more expensive,” he remarked.

He added that banks and building societies are concerned about the probability of mortgage payers falling into negative equity as their property values decrease.

Meanwhile, F&C Investments has warned that despite celebrations in the financial markets after several UK and US organisations were aided by their governments, the “hangover will continue for some time” for global economies.

By Jamie Price