According to the British Council of Mortgage Lenders (CML), the government will need to reform the way in which lenders raise funds in order to prevent house buyers facing difficulties finding competitively priced mortgages. The Council of Mortgage Lenders postulated that a funding gap of around £300 billion will appear when the current government-run support schemes finish in 2014. The funding gap is basically the difference between the sum house buyers wish to borrow and the actual funds available to them and is expected to remain large thanks in part to many bad credit mortgages and low-value re-mortgages offered as a result of the long-standing economic depression..

The housing market, therefore, faces major uncertainty as to how mortgage lenders will replenish the £300 billion potential shortfall-if indeed they will be able to. Industry analysts and insiders believe that what is needed is a new policy approach formulated to stimulate the development of wholesale funding. Many caution that, unless this happens, there is likely to be a long-term fall in the amount of choice for mortgage customers in the UK, and that without such new government support, establishing a sustainability market on the scale needed to fill the upcoming funding gap could be extremely problematic.

Such a scheme may well involve wrapping up and repacking existing mortgages in order to sell them as interest-bearing bonds. The bonds would be sold to institutional investor, thereby raising funds for new lending. Firms might be left reliant on continued government funding, with the UK risking facing a real credit undersupply, leading to the rationing of mortgages for customers for a protracted period of time, according to the CML. Many, including the Council of Mortgage Lenders, believe that, even if the wholesale markets began working properly again on the scale previously witnessed ore 2007, which many analysts believe to be rather unlikely, considerable uncertainty would exist as to whether or not lenders would be able to repay the full extent of government funding. It seems highly likely, therefore, that there will need to be an extension of the current period of government support.

The CML also stated that the remarkable reduction in levels of competition in UK mortgage markets is one of the results of the fact that wholesale debt markets were closed in 2007. Added to this, the emergency government measures to close the concomitant gap, despite being largely welcomed, focused largely on those taking bigger deposits which adds to the general lack of competition in the market.