Financiers 'need to increase mortgage lending'

The housing market requires more liquidity in mortgages, an expert has said.

Banks and building societies need to increase their lending of home credit packages such as tracker mortgages as part of a strategy to help the UK's residential housing market recover following the global economic downturn.

That is according to Helen Adams, managing director of online resource First Rung Now, who feels that a reduction in the asking prices being sought from sellers forms an important part of this post-recession process as well as more liquidity in the mortgage sector.

Ms Adams was speaking following the publication of a report yesterday (December 13th 2010) by property company Rightmove, which found that requested costs have fallen by three per cent thus far in December, meaning that that five of the last six months have witnessed reductions.

In addition, the firm expects this trend to continue in 2011 - with the national average desired selling price being five per cent lower over the course of the year - while the volume of homes being listed for purchase also expected to drop to around 1.2 million, a figure which represents a ten per cent contraction on 2010.

The expert commented that first-time buyers still have a major role to play in the overall health of the sector, despite the fact that conditions remain tough.

"If it is difficult for first-time buyers that will affect the rest of the chain. Without first-time buyers there is no movement, so dropping prices to make it a bit easier for them is probably going to be a necessity," she explained.

The First Rung Now official went on to say that many analysts still feel that properties in the UK remain "overpriced", meaning that it is hard to fathom how the sector will recover unless costs for investors are lowered.

Meanwhile, Halifax stated recently that house prices in the three months to November were 2.1 per cent lower than in the preceding quarter.