The trade body has called for greater support for first-time buyers, extra liquidity in the market and improved income support for those struggling with repayments.
Richard Farr, director of AMI, says: “The mortgage market is going through a turbulent period, largely due to the effects of the liquidity crunch.
“Lenders have said on the record that they are looking to improve their margins rather than increase market share, so while bank rates have been falling, last week actually saw an increase in the variable rates being charged by some lenders.”
He believes the danger is that fewer people will get mortgages and those who do will have to pay more for them.
Farr adds: “Partly as a result of the liquidity crisis, lenders are restricting some of their innovative products that have allowed some first-time buyers, the credit impaired and buy-to-let investors, into the market.
“This can be seen by Northern Rock’s decision to invite many of its existing borrowers to look elsewhere. We believe the government should provide a boost to the market and support to consumers who will face a difficult period with tens of thousands of people coming off fixed rate loans in the next year.”
AMI says it still has concerns over Capital Gains Tax changes.
It says the reforms will encourage short-term buy-to-let landlords over long-term investors, which will not help consumers or the wider market.
AMI believes the thresholds for Stamp Duty have not risen in line with property prices.
Farr called for a debate on possible exemptions from Stamp Duty for first-time buyers.