Mortgage lending 'too restrictive to meet demand'

Banks need to lend more to meet high demand from potential property buyers and pull the UK out of the economic downturn, says the National Association of Estate Agents (NAEA).

The NAEA, which represents UK estate agents, believes the majority of buyers in the economy at present are also sellers.

Last month a third of estate agents in an NAEA survey reported a ten per cent increase in properties coming on to the market, compared with six months earlier.

Today, Peter Bolton King, Chief Executive of the property body, gave an upbeat assessment of activity in the housing market after the latest Nationwide house price survey reported a 0.9 per cent increase in house prices in June.

"These figures represent further evidence that estate agents are finding people the properties that they want at realistic prices for both seller and buyer," Mr King said.

"However, behind these figures the situation remains that mortgage lending currently is far too restrictive. Banks need to lend more.

"This will bring not only more demand to the market in the form of potential buyers, but also more supply because the majority of buyers are also sellers."

He added: "This will bring the broad stability to the market that will pull the UK out of the housing slump."