Fewer mortgages 'won't affect house prices'
Published On 28 October 2007
The reduction in the number of mortgage products available to consumers in the UK is unlikely to affect house prices in the UK, an industry expert has said.Bernard Clarke, a spokesperson for the Council of Mortgage Lenders (CML), said that the housing market in the UK is based on the demand and aspirations of consumers.
He added that these factors, along with a supply shortage, would help support house prices even if the number of available mortgages declined on the back of the global credit crunch.
"I don't think the availability of mortgages is going to be affected to such an extent that it will affect the housing market, I think the biggest impact will be on the sub-prime sector, which would only have a modest effect on the housing market," he explained.
"What's driven the housing market is what drives all markets, and that's supply and demand.
"While we expect the fundamentals of strong demand for home ownership and the shortage of the supply housing to continue to underpin the market, we do think there will be a flattening off of house price growth for affordability reasons."
Recently, Ernst & Young's Item Club reported that it does not expect house prices in the UK to crash in the future. However, its members did say that house prices growth was likely to slow in 2008.
