Mortgage lenders have voiced concerns over a ?300 billion shortfall in their lending capability as savings will not meet their needs.
The Council of Mortgage Lenders (CML) said that the funding gap is currently being filled by government schemes, which are due to end in 2014, reported the BBC.
The Council claimed that in the long term, this might result in reduced choice for consumers, and that first-time buyers would be hit as loans would only be available to those who could afford a hefty deposit.
The CML?s News and Views publication said that the UK could be at risk of a serious shortage in supply of credit, and a rationing of available mortgages for several years to come.
Prior to the onset of the credit crunch in 2007, the mortgage funding gap was covered by the wholesale mortgage debt market, the CML said, but when the credit squeeze began to take hold that market froze, and the government was forced to find alternative means of funding. It did so with such programmes as the credit guarantee scheme, and the special liquidity scheme.
The CML said that it was worried that the wholesale market would not return in the future to levels seen before the credit crunch, and savers? deposits would be used to fill the gap.
The CML said: ?Unless there is a policy approach intended to encourage the development of wholesale funding, we are likely to see a long-term decline in choice for UK mortgage customers.?
A ?clear strategy? was needed, it added, to get the UK mortgage back on sound foundation as soon as the general election was over.
