£300 billion mortgage funding gap 'a worst case scenario'

Posted: 04 Feb 2010 10:26:51 GMT

Recent warnings from the Council of Mortgage Lenders (CML) that there could be a £300 billion shortfall in home loan funding by 2014 should be looked upon as a "worst case scenario", it has been advised.

Andy Pratt, chief operating officer at Alexander Hall, says: "They [the CML] have probably taken a worst case scenario of what would happen if the banking sector struggled and there wasn't any new funding coming into the market."

The CML states that this gap is currently being filled on a temporary basis by government funds through measures such as the credit guarantee and special liquidity schemes.

However, these will have expired by 2014, thus creating a shortfall in the mortgage market.

But Mr Pratt feels that these predictions do not take into account the potential that five new banks could be set to move onto the British high street, as well as new money that is to be brought in from the Bank of China and similar institutions.

Mortgage lending figures in 2009 totalled a value of £143.7 billion, which was the lowest annual sum since the year 2000, the CML reports.

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