Banks 'need encouragement' to increase mortgage lending

26 July 2010

Written by Jeni Browne

Banks should be encouraged to increase mortgage lending, one organisation has said, calling for a "practical solution" to be found to support the sustainability of the market.

The Association of Mortgage Intermediaries (AMI) argued in its latest Quarterly Economic Bulletin that the withdrawal of the Special Liquidity Scheme in April 2011 will hinder financial institutions' ability to fund borrowing.

It predicted that gross home loan lending may not reach the £150 billion the body had previously estimated for 2010 and the banking sector will need to dedicate £800 billion to refinancing over the next year and a half.

Robert Sinclair, director of AMI, commented: "A practical solution is required that allows a sustainable mortgage market, so that consumers can look for a property safe in the knowledge that funds might be available."

According to the Council of Mortgage Lenders, lending for the purchase of property saw a modest increase in May, with a three per cent rise on the amount provided to homebuyers compared with the previous month.

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