According to reports from the Council of Mortgage Lenders, providers of contractor mortgages in the UK face a staggering £300 billion shortfall between the amount they can lend and the value of their saver’s deposits.
Currently, this deficit is being funded by the government but they have already stated such schemes will not be available after 2014.
Long term, this could limit the choice for consumers and affect first-time buyers and those at the bottom of the chain since the majority of loans would only be available to people with large deposits.
Before the credit crunch, most of the funding deficit was made up using wholesale mortgage debt but when this dried up the government was forced to step in and implement the credit guarantee and special liquidity schemes.
The Council of Mortgage Lenders have already stated that it is unlikely that wholesale mortgage markets will return to pre credit crunch levels, and that retail savers alone are not enough to bridge the gap. It is now calling on the government to implement new measures to encourage wholesale funding to prevent a widespread decline in the number and availability of mortgages for personal customers.
It added that a “clear strategy” was now required to ensure the sustainability and future prosperity of the UK mortgage market.
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