Michael Coogan, director general of the Council of Mortgage Lenders, has painted a pessimistic outlook for the New Year in his speech to the organisation's annual conference.
'First time buyers have been effectively squeezed out of the market because of new deposit requirements. Even the Bank of Mum and Dad can't afford the higher deposits as lenders' tighter credit requirements have accelerated faster than falling house prices,' he told his audience.
'Because there are fewer active lenders, with access to less money, we have effectively returned to mortgage rationing,' he said.
Coogan argued that the downward trend of the last 12 months cannot be reversed so that we see a return to 2007 levels of lending next year as the government has insisted.
'While there is pent up demand in a number of areas of the market, consumer borrowing will simply not return to the levels seen in 2007 even if funds increased and a wide variety of lenders were to become active in the market again,' he said.
'Unless the government takes further targeted action to help market participants, we will see a worsening of the picture next year compared to this,' he added.
A good outcome would be if lending was at the same level as 2008, he said but the CML has yet to confirm its 2009 lending forecasts as it is still reviewing the impact of the pre-budget report announced last week.
However, the organisation does not expect retail lending institutions to lend more next year. Also the 'deliberate exclusion' of wholesale funded lenders from the special liquidity scheme has cut off a number of organisations who might otherwise have been helping to provide new mortgage financing now.
