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As the housing market worsens in the US, the motor loan industry is feeling the pinch. New motor loans are not being approved by banks in many cases, and even those with established track records are finding it impossible to get a new motor loan. Until the housing market changes, this may be the future of the motor loan industry.

“U.S. housing starts have left no doubt that the housing crunch is still in full swing,” said Dimitry Fleming at ING Wholesale Banking. “Home builders have now cut production 60% since the peak early 2006, but despite these drastic measures the overhang - as measured by the months of available supply - is still enormous and is even approaching the highs of the early `80s crash. For now, all they can do is wait for Federal help and in the meantime cut, cut, cut production.”

Darren Cook, of analysts Moneyfacts, said “With fears of base rate increases, swap at over 6.3% and rising, and lenders continuing to price more for risk, it is likely that mortgage rates will continue to follow suit. Under these uncertain times, many borrowers are looking to fix their mortgage payments and a five-year deal could become a preferred option rather than the popular two years.

Related reading: Motor Loans