by Gill Montia
The desperate need for increased mortgage lending has been highlighted by a report from the Centre for Economics and Business Research (CEBR), which is predicting that UK house prices could fall by a further 25% in 2009.
Taking into account last year’s 16% decline, the forecast gives a peak-to-trough fall of 40%.
The independent consultancy is a little more optimistic about the slide in values if government measures can increase new mortgage lending volumes to 50,000 a month, up from the 31,000 recorded in December by the Bank of England.
In this case the CEBR expects the average property to see 32% of its value wiped out from the peak of the market in summer 2007 through to the first quarter of 2010.
According to the body’s economist, Benjamin Williamson, current price and interest rate levels could lead to substantially increased activity in the housing market, if lending can be freed-up.
However, if new mortgage approvals remain close to today’s levels Mr Williamson warns that the fall in prices could accelerate.
Earlier this month the Royal Institution of Chartered Surveyors (Rics) reported that buyer interest is increasing but warned that without mortgage finance prices will continue their downward trend.
The Rics, Council of Mortgage Lenders and others continue to call on the Government to implement the recommendations of the Crosby Review and provide guarantees for the mortgage-backed securities that can help generate funds for new lending.
