Moody’s is warning of a mortgage famine from the start of 2011, as lenders are forced to face up to repaying a collective £319 billion borrowed from the Government during the credit-crisis stricken years of 2007 and 2008.
The sum amounts to one-quarter of the UK’s entire £1.3 trillion residential mortgage book and the credit ratings agency is expecting banks to limit their lending by imposing ever tighter criteria for borrowers.
If the forecast is accurate, and banks are still unable to raise cash for their mortgage businesses on the wholesale money markets, the outlook for the UK housing market is bleak.
Next year could also see smaller lenders forced into mergers as a result of the contraction.
Separately, Rightmove has just reported that asking prices rose 3.2% in the month to mid-February.
However, the property portal cautioned that the market is currently more akin to the mortgage-rationed times of the 1970s and 1980s and that the current upwards pressure on house prices is not sustainable with a restricted number of buyers.
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