Mortgage shortfall 'could amount to £300 billion'

The mortgage market could be left with a £300 billion shortfall in funding by 2014, it has been claimed.

According to the Council of Mortgage Lenders CML, the gap is currently being filled by government funds - namely through the special liquidity and credit guarantee schemes - but these will have expired in four years' time.

As a result, the CML says uncertainty about how lenders will be able to re-finance this £300 billion currently hangs over the market.

Andy Pratt, chief operating officer at Alexander Hall, said he was "surprised at the scale" of the potential shortfall, but added that the CML prediction is likely to be based on the most negative potential outcome.

"They have probably taken a worst case scenario of what would happen if the banking sector struggled and there wasn't any new funding coming into the market," he said.

Mr Pratt added that he believed many lenders are now "more optimistic" than they have previously been, potentially alluding to the introduction of more cheap mortgage deals to the market.

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2010-02-04 12:57:51 © Moneyextra.com