Housing market will improve

Posted: 10 Jun 2008 13:15:51 GMT

Lenders will begin to relax their criteria to bring back consumer confidence in the housing market, an industry expert has suggested.

Lenders will begin to relax their criteria to bring back consumer confidence in the housing market, an industry expert has suggested.

Independent adviser Bestinvest has said that things cannot continue as they are and that once liquidity returns, so will confidence.

Peter O'Donovan, head of mortgages at Bestinvest, has said that whilst the market will not return to the unsustainable levels seen six months ago, it will definitely improve.

Mr O'Donovan said: "I don't think the Bank of England will allow mortgage rates at eight per cent and a base rate at four and a half per cent. I think they will have to try and do something about that, otherwise confidence will just go totally."

First-time buyers will also benefit from falling house prices and property "will start to become affordable to them again".

Amateur landlords that are now faced with expensive rates may also decide to sell, according to Mr O'Donovan, which will mean more properties coming on the market.

The latest Council of Mortgage Lenders (CML) figures showed that there was a five per cent increase in gross mortgage lending from April to March, although that was still an eight per cent decline from April 2007.

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