Housing transactions could slump even lower in the UK if the government fails to take action over the contracting mortgage market, warned the chairman of Redrow as sales rose since July due to a shift in product mix.
Redrow is a British housebuilding and general construction company based.

The chairman and founder of Redrow, Steve Morgan, said that the mortgage situation is deteriorating as the major banks are being squeezed to repay colossal government loans, pushing overall housing transactions even lower.

“Housing transactions, they are already at historic lows, I can see that situation hovering at the same or possibly getting worse over the next 18 months unless something is done,” Morgan told Reuters.

“We’ve noticed in the last few months that mortgage availability has got a lot worse. The bank of England is insistent that the banks give back the 600 billion … this means tightening up their balance sheets and reducing lending even further,” said the housing industry veteran, who also runs Wolverhampton Wanderers football club.

The dearth of mortgages stems from a lack of competition in the market, with the majority of players withdrawing in the fallout from the credit crisis and leaving just six lenders.

Underlying demand is strong for houses in the UK, particularly in the first_time buyer market, said Redrow, but very few mortgages are available, pushing up the average age of a first time buyer to 37 years.

Redrow said the lack of competition in the mortgage market is constraining growth in both the housing sector and the wider economy and called on the government to intervene by freeing up the supply of mortgages.

“You can’t have a thriving economy without a healthy housing market. Our message to the government is simple: the regulators are going too far and the medicine risks killing the patient,” he added