National debt 'makes mortgage lending more expensive'

Date:Friday 7th May 2010
Author: Max Freedman

The size of the UK's budget deficit is making it more expensive for mortgage lenders to hand out money for property purchases, a representative from an industry body has claimed.

Director of the Association of Mortgage Intermediaries (AMI) Robert Sinclair called on the next government to tackle the national debt and stressed that the situation could end up affecting mortgage applicants, as well as the country as a whole.

He remarked: "The cost of funding the current levels of borrowing will be a continual drain on the economy and drives up the cost of lending between banks."

The AMI spokesperson stated that the intermediary mortgage sector needs to be supported and the government must "work harder" to ensure success in the industry.

Mr Sinclair's comments follow the publication of the AMI's Quarterly Economic Bulletin, which suggested that public spending may be cut and the 'tax net' may be widened to decrease the size of the budget deficit.

The organisation recently criticised the government over the Budget, claiming that restricting the £250,000 threshold for stamp duty will limit its impact.