Since the financial crisis, sub-prime mortgages have ceased to exist and 100% mortgages have significantly reduced in number.
Last year gross mortgage lending totalled around £140bn and the Association of Mortgage Intermediaries last week predicted gross lending would not exceed £135bn this year.
But John Wriglesworth, chairman of financial services PR firm The Wriglesworth Consultancy and a former economist for Hometrack, says the market will recover when sub-prime and 100% loans come back to the market.
He says: “Unless 100% mortgages come back you will not see a normal housing market. A healthy sub-prime market, real sub-prime not near prime, must come back to the market and risk pricing should come back to the market. If you want to lend six times income, charge 8%.”