Tough new mortgage lending rules which will include restrictions on how much a person may borrow, are expected to come into force next year.

For some time now, banks have been accused of lending irresponsibly, which allowed home buyers to be able to borrow more than the value of the home and also take out interest only mortgages without having to provide any evidence of how they intended to repay the loan. Millions of homeowners will become ‘mortgage prisoners’ if the controversial introduction of new loan rules goes ahead next year, experts have warned.

The CML say that the proposals are fatally flawed. And their director general, Michael Coogan, said “It will trigger a sharp rise in negative equity, interest-only mortgages will disappear and leave young people unable to buy a home until their late 30′s or even later.”

The golden age of homeownership is over for the moment. This is another blow for homeowners and the new rules are expected to trigger a slump in property prices after two separate independent sets of analyses came to the same conclusion.

First time buyers are the biggest problem in the housing market at the moment with the number dropping from 600,000 per year to just below 200,000, and this number is expected to fall even lower. The number of people who will be trapped in negative equity (where the mortgage is bigger than the value of their house) will also increase.

The fear is property prices will fall because of the changes and this is a major blow for anyone who needs to sell their home fast. No one wants to buy a property then take out household insurance only to find that they are in negative equity. The new proposals mean the mortgage market will be changed beyond recognition for millions of people. The credit crunch has already set off a clampdown on mortgages. The fear is that only the rich and well paid with a clean credit history will get a mortgage.