New restrictions on high-risk customers could mean banks refuse sub-prime mortgages they would previously have allowed, it has been claimed.
Research published by The Mortgage Lender (TML) reveals that if current lending restrictions were applied retrospectively to applications made in August, one in four would have been refused.
Managing director of TML David Titmuss said the impact of this change in lending could be far greater than many commentators have considered.
He said: "There will certainly be even more home repossessions, and the overall result will be a fall in house prices as the money to buy them simply contracts."
More borrowers will have to seek debt management help and individual voluntary arrangements, he said.
Last night, the BBC’s Panorama programme revealed that 70 per cent of recent repossessions were of homes owned by sub-prime borrowers.
Statistics from the Council of Mortgage Lenders have shown repossession rates are at their highest in eight years, with 77 homes repossessed every day in the first half of this year.