The Association of Mortgage Intermediaries (AMI) has published its latest Quarterly Economic Bulletin which focusses on the UK economy, housing and mortgage market.

In the Quarterly Economic Bulletin the gradually improving but generally flat UK economy is assessed, outlining the continuing limited growth prospects for the country constrained by the global situation.

The report identifies the potential impact this might have on the government’s debt reduction targets, the new focus on housing as a means of promoting growth in the domestic economy and the impact this will have on mortgage availability and interest rates.

Robert Sinclair (pictured), chief executive of AMI, said that while credit easing and money supply levers are pulled to encourage activity and lending, regulators are bearing down on the banks to increase their capital ratios.

He said: “The new Financial Policy Committee declared in March that banks need an additional £25bn in capital to cover further losses in their books. This demonstrates the schizophrenia at the heart of policy making. All other things being equal, this means less lending and less profitable banks – not a good way to encourage a return to brisk activity, and at odds with the policies like the extension of the FLS and Help to Buy.

“Mortgage fees continue to rise as rates have dropped – the initial fee payable to secure a mortgage product has increased. Moneyfacts calculate that the average fee is now £1,522, the highest in 25 years. Initial arrangement fees are good news for lenders’, allowing profit to be booked on day one. However, the concern is that escalating fees may discriminate against lower end borrowers, who already face an uphill battle to save for both a deposit and the cost of the stamp duty tax.

“In this environment, advice will be more crucial than ever, and prospective borrowers will need the insight of intermediaries to navigate beyond headline rates to find the most affordable and appropriate mortgage products.”