Mortgages funding 'needs government support'

19 May 2010

With a £300 billion mortgage funding gap, the borrowing industry in the UK will need the support of the coalition government, the Council of Mortgage Lenders (CML) has said.

After a disruptive few years, the home loans sector has finally become more stable over the last 18 months, the CML reported, but it is still operating at a significantly lower level than before the financial crisis and will need help to recover.

There has been a reduction in funding, fewer active mortgage firms and less choice available to customers, the organisation noted.

In order to improve conditions in the market, the nation's leaders and the Bank of England would have to ensure transitional measures are put in place before they withdraw their support for the industry between 2011 and 2014 as planned.

As there have been more problems repaying mortgages since the recession, the CML has also advised that low and stable interest rates and government intervention is needed to help borrowers in financial difficulties.

There has been a decrease in mortgage arrears and possessions in the first quarter of the year but, with many households still struggling, there is more work to be done, the body recommended.

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