Melanie Bien
Director, Savills Private Finance, independent mortgage brokers

“The bottom of the housing market seems to be in sight. The number of new inquiries reported by surveyors has risen and more people are applying for mortgages.

“But we are not out of the woods. While there has been more interest from potential buyers since the turn of the year, fuelled by lower prices and cheap interest rates, the volume of transactions remains weak. The main reason is difficulty in obtaining mortgage finance, which is likely to present one of the biggest barriers to recovery.

“Lenders are much more cautious than in the past, preferring borrowers with deposits of 25 or even 40 per cent, or similar equity in their homes.

First-time buyers with little or no deposit have been frozen out.

“It is still possible to get a mortgage if you only have a 10 per cent deposit, but expect to pay a huge premium for it – around 2 per cent more on the rate than if you have 25 per cent to put down. Without first-time buyers, the lifeblood of the market, the housing market is going to struggle to recover to the levels of early 2007.

“Lenders are also being far stricter on criteria, refusing applications for the most spurious of reasons. They need to regain their appetite to lend, which will help the housing market and the economy as a whole, and the Government needs to do its bit by encouraging banks in which it has a stake – Northern Rock, RBS, Lloyds TSB and HBOS, to do significantly more lending.”

Bob Bond
Chief executive, Rydon, construction and development group

“The main issue still inhibiting the market is that of confidence, which cannot be restored by policy alone. To improve confidence, banks need to come out of the retrenched position that they have taken since the crisis began and to start lending to both individuals and companies.”

Peter Cosmetators
Director for finance policy, British Property Federation

“There are endemic risks and issues with commercial property and it is to everyone’s peril if they are ignored. There is very extensive bank lending against commercial property, both to property companies and also to ordinary businesses that put up their premises as security for loans.

“The banks have a lot of exposure to property. The Government has taken a stake in banks responsible for about half the property lending in the UK, and I suspect that a significant part of the asset portfolio insured by the Government will be loans secured on real estate.

“While banks are having loans serviced they can afford to ignore the fact that the asset value has fallen below the value of the loan. But if borrowers have difficulty in servicing their debt and banks go for enforcement, commercial property prices will fall still further and new businesses will be unable to take advantage because the banks are not lending to them. A patient approach is in the interest of banks, borrowers and Government.”