This is the opinion of Andrew Hagger at Moneynet.co.uk who looks at the situation for those contemplating buying their first home.
“We are still facing a relentless stream of doom and gloom surrounding everything mortgage related, but what will it take to start to turn things around? The return of the First Time Buyer (FTB) is critical if we want to kick start the housing market.
“We need to move away from mindset where we view buying a property as a get rich quick scheme and return to seeing it as a longer term investment, but first and foremost as your home.
“Both borrower and lender should be focussing on the improved affordability of the mortgage rather than purely the potential for the value of the house to fall further. And if it is the prospect of unemployment that worries the lender then why not make it a condition of the advance that MPPI is taken out?
“It’s a vicious circle for lenders, because if they’re not prepared to advance mortgage funds, the economy will continue to falter, and more of their existing customers will lose their jobs and be unable to meet their existing financial commitments thus triggering an increase in bad debts.
“Whilst entering the housing market will still be too scary for many to consider, the government and lenders need to act soon if we are to start to dig our way out of the long dark tunnel of recession.”
