The sector is facing a severe drought in home loans, an expert has suggested.
The UK mortgage market is suffering from "famine" conditions, a top economist has claimed.
Stephen Nickell, who formerly helped to formulate financial policy at the Bank of England and is currently chairman of the government-backed National Housing and Planning Advice Unit, suggested that the restrictions on borrowing that have been enforced by mortgage firms in recent months have led to a dramatic reduction in home loan deals.
This has been backed up by the release of two separate surveys, from property researchers Hometrack and the Land Registry, over the past week. Both of these reports suggested that overall loan numbers have dropped by around 50 per cent over the past 12 months.
Speaking to news agency Bloomberg, Mr Nickell also indicated that the Bank of England might avoid raising the base rate of interest - because this move is likely to worsen the mortgage drought by making loan repayments still more expensive.
"In the mortgage market, it's almost a famine,'' he commented. "I'm very pessimistic at the moment. In the end, because of the lack of trust, unless there's some kind of kite-marking and guarantee system so that mortgages can be used as collateral by the lenders, then I'm very gloomy.''
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