Releasing its latest Quarterly Economic Bulletin looking at the economy, housing and mortgage markets, Robert Sinclair, Director of AMI, said: "The spending review and debates around quantitative easing indicate that maintaining the balance between fiscal integrity and ensuring economic recovery remain key issues for policy makers.
"The limited funding available for mortgage loans appears capable of sustaining the purchase market and under-pinning property prices. As long as base rates remain low remortgaging and fixed rates don't look attractive. However, once they start to rise fixed rate remortgages will soak up the limited funds available, which would have an impact on the wider market, with less funding available for property purchases.
"Overall we expect property prices to remain flat, although this will mask some significant regional variations. With affordability less of an issue, it is deposit size and credit history that are the barriers to an expanded market. However, the need to get the buy-to-let market restored in order to meet the demand for rental property remains crucial.
"In September 2006, buyers of £125,000 homes got a 75.9% mortgage. Now the average loan offered is just 64.3%. For a £500,000 home however the LTV has only declined from 55.6% to 51.8%. This might be the most selective credit crunch in history."
