Remortgage business could diminish further in 2009 as borrowers are forced to stay on their lenders’ SVRs until LTVs come down, the Association of Mortgage Intermediaries warns.
AMI’s latest Quarterly economic bulletin says brokers may find borrowers impossible to place with lenders until LTVs come down.
It says: “This means less business for brokers who will find these borrowers untouchable by other lenders until they are out of negative equity.”
AMI says that although the multibillion pound government recapitalisation and bank nationalisation plans were necessary, they won’t be sufficient to allow borrowing between banks and lending to corporate and retail customers to begin again.
More worryingly, it says that demand for credit has now ebbed away so the prospect of improved supply is immaterial.
It has also scrapped its previous predictions of £55bn of net lending in 2008 and reduced it to between £38bn and £43bn.
The International Monetary Fund echoes AMI’s outlook and warns that the UK faces its most severe economic downturn since the recession in the early 1990s.
In its latest biannual World economic outlook report, the IMF predicts the UK will be the worst hit of the world’s leading economies due to ongoing financial turmoil and falling house prices.
Filed under: Economy, Financial, Mortgage News, Mortgages | Tagged: mortgage lending, recession
