Lack of mortgage funding must be addressed

"High octane volatility" in the money markets is making predictions on the future of the housing market more difficult, according to the Council of Mortgage Lenders (CML).

The CML claims the latest development in the banking sector, like the bail-out of HBOS by Lloyds TSB and the collapse of Lehman Brothers, were unexpected and the body said decisions have been made that many would have deemed impossible a few months ago.

With house prices falling, sales plummeting and remortgaging activity low, the CML said the lack of credit available for people wanting to take out a mortgage needs to be addressed immediately.

The CML said: "The lack of funding and the low level of mortgage approvals means that the coming months are likely to see activity continuing to weaken."

Last week, the governor of the Bank of England , Mervyn King , did a u-turn and announced the Special Liquidity Scheme would be extended from October 21st until January, reports the Times.

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