The latest Quarterly Economic Bulletin from the Association of
Mortgage Intermediaries (AMI) has revealed that banks face continuing challenges to their ability to fund
mortgage lending.
The Bulletin also found that there are concerns regarding the planned withdrawal of the Special Liquidity Scheme and its impact on lending. The scheme - which was introduced in 2008 to improve the liquidity of the banking system by allowing banks and building societies to swap their high quality mortgage-backed and other securities for UK Treasury Bills for up to three years - is looking likely to be scrapped.
There are also suggestions that measures intended to reduce the structural deficit will continue to be a drag on the economy and that the banking sector needs £800 billion for refinancing in the next 18 months.
AMI Director Robert Sinclair said, "All the main banks face challenges to their ability to fund
mortgage lending, as the Special Liquidity Scheme reaches its repayment phase early next year. A practical solution is required that allows a sustainable
mortgage market, so that consumers can look for a property safe in the knowledge that funds might be available.
"With the emergency budget behind us we have more certainty about interest rates, taxation plans and likely levels of unemployment as the public finances are brought under control. We expect
house prices to have a large degree of regional variation, with prices overall reaching the year end much the same as now,” he added.
