The Association of Mortgage Intermediaries (AMI) has raised concerns over the size of the UK budget deficit and the long term impact on the nation’s finances in its latest Quarterly Economic Bulletin looking at the economy, housing and mortgage markets.
The Bulletin says that the size of the structural deficit will require a severe squeeze on public spending and the prospect of widening the tax net, if not increased tax rates.
The report also suggests that gross mortgage lending will be around £150 billion for 2010, slightly ahead of the £143 billion managed in 2009, but still far below the £363 million peak in 2007.
It predicts that net lending in 2010 will be around £20 billion, with slowing redemption levels, while the housing market recovery is slowing following rapid rises in London and South East.
Robert Sinclair , director of AMI, said: “Whoever forms the next Government must put in place real debt reduction plans. The cost of funding the current levels of borrowing will be a continual drain on the economy and drives up the cost of lending between banks. This continues to make new mortgages look less attractive than the current default rates many consumers are enjoying after their fixed term deals end. However