Slowdown on mortgages predicted to continue

Problems in the mortgage market are expected to continue until at least 2009, according to new research.

The report by the Association of Mortgage Intermediaries (AMI) estimates that net lending on mortgages in 2009 will not exceed that of 2008.

It forecasts that lending for 2008 is set to be around the £55 billion mark, just half the level of the previous year.

The slowdown is likely to cause the closure of several mortgage providers, with those with good customer relationships best placed to survive.

Chris Cummings, director general of the AMI, called on the government to provide planning and a clear set of actions for a recovery programme, citing the US government's response to the ongoing economic downturn.

"The impact of the credit crunch is likely to be felt much longer and deeper than was expected 12 months ago," he added.

Earlier this week the AMI called for caution from the government over calls to introduce greater regulation in the financial market.