Speaking at The Mortgage Event 2010 in Coventry, Phil Jenks, managing director of Phil Jenks Consultancy, said that the lack of attention paid to fixing funding had made it the key problem for the market and action is needed.

He highlighted that the issue was particularly pertinent because lenders need to find anywhere between £470bn and £520bn in the next few years in order to fund such things as repaying the Bank of England’s Special Liquidity Scheme of £185bn and the Credit Guarantee Scheme of £135bn.

Jenks said: “We haven’t put enough emphasis on fixing funding and it has now become the real issue of the market and is holding everything back.

“Lenders need to find up to £520bn and that is a scary figure and it’s designed to be. I think that the figure is actually about £300bn because banks have squeezed corporate clients to repay their debt.”

He continued that lenders are working to fix the issue, with securitisation back to 2005 levels.

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However, Jenks said that lenders facing repaying the funding will not look to actively lend in 2011: “Unless we fix funding, then we will stay at the low levels of transactions and gross mortgage lending that we are currently experiencing.”

In addition, the level of current regulatory movement across the UK and Europe will also discourage a return to a more balanced market, he said.

Nevertheless, Jenks forecast that the average SVR will rise to 5.4% by the end of 2013 from the current average of 3.6%, potentially fuelling the remortgage market back into life. This could be driven by Barclays and HSBC, which Jenks said seem keen to start a “remortgage war” and stimulate the market.

He also predicted that base rate will not move next year before rising gradually to 2% by the end of 2013.