The housing market is stuck: David Cameron criticises 'excessive' home loan restrictions

By DAILY MAIL REPORTER
Updated: 06:21 EST, 6 January 2011

The prime minister has said banks and building societies are to blame for becoming too stringent in their lending regulations.

David Cameron said high-street lenders were being too cautious and were preventing the housing market from progressing.

His comments follow a report which revealed millions of Britons have resorted to using a credit card to meet their mortgage payments.

Rules are too tight: David Cameron told voters banks and building societies must return to 'respectable' lending

Speaking to voters in Leicester, Mr Cameron said it was vital for the economy that Britain's housing market became more competitive.

Banks and building societies have introduced more restrictive mortage rules since the global economic crash revealed millions had been sold mortgages beyond their means.

But the prime minister called on lenders to return to 'respectable' lending in order to stimulate growth.

'In a way the pendulum has now swung too far the other way,' he said.

'If you are a single person, you are earning a decent salary. You go to the bank or building society, you are actually quite a good risk - they won't give you 80 per cent of the value, they won't give you four times your salary.'

Stagnant: The prime minister said the housing market must grow to aid the UK economy

He added: 'You need a housing market where people are able to sell and move.

'The housing market has become very stuck and we've got to get it moving again.'

Yesterday Housing Minister Grant Shapps launched plans for a 'housebuilding revolution', with the Government hopeful that a revamp of planning permission rules could encourage more families to build their own properties.

Mr Shapps is soon to meet Hector Sants, head of the Financial Services Authority, to discuss Britain's mortgage regulations over fears strict rules could 'snuff out' new mortgage products.