In an interview with the BBC Hornby says that it will take house prices rising in the US to stimulate lending in the UK as two-thirds of the funding for British mortgage market comes from overseas.
Hornby says: “My personal view, for what it’s worth, is that it will take 18 months to play through the system.
“It’s going to take 18 months before US house prices have started to rise again – which is what’s required for banks to have the confidence to start lending again.
“It will take a long time to play out.”
He also says that there is little the government can do to stimulate the market and that there is “no doubt” that the UK will see house price deflation similar to that experienced in the 1990s.
But he says unemployment will not be as affected as in the 1990’s and so people will still be able to pay their mortgages.