Liquidity situation 'to ease'

The UK mortgage market will soon start to ease as liquidity improves, it has been predicted.

Peter O' Donovan, head of mortgages at brokerage Bestinvest, argued that a situation in which mortgage rates are at odds with the base rate will be unsustainable.

He commented: "I don't think the Bank of England will allow mortgage rates at eight per cent and a base rate at four and a half per cent."

Mr O' Donovan suggested liquidity conditions will ease, bringing down mortgage rates, although the sort of market which existed before the credit crunch will not return.

Such news may be good for those planning on taking out mortgages to fund self build home projects.

A similar view about the market was expressed this week by the National Association of Estate Agents, which said there will be a gradual recovery and slow price rises rather than another spell of high inflation in the sector.