Mortgage limit will add to market woe

What do they know that we don't? That's a question many house-hunters will be asking following the disclosure that NatWest and Alliance & Leicester are limiting the amount they will lend borrowers in parts of London and the south-east because they fear property prices in these areas could fall.

While individual lenders are clearly free to parcel out money in the way they see fit, they have to recognise that by talking about the market's potential "vulnerability" and explicitly mentioning nega tive equity, they will have left many home buyers feeling jumpy, and this could have an impact on property values - that is, lead to prices falling. There is a risk we could end up talking ourselves into a property recession.

NatWest, in particular, seems to have gone about things with a cloak-and-dagger - it is restricting mortgage lending in a number of hotspots but won't disclose where they are.

Its decision throws up many more questions than answers. How is it deciding which areas are more "risky" than others? Where is it getting its data from?

Unlike some lenders, NatWest doesn't have a chain of estate agents to ask. Land Registry data is arguably out of date - the latest figures are for last July to September. Maybe NatWest is getting local bank branch managers to scan the property ads in the paper.

Certainly its view seems to be out of step with those expressed by most housing commentators that UK property prices will continue to increase this year by about 5%-6%.

For individual lenders to effectively dictate where a borrower can or can't buy a house smacks of dangerous meddling with the market.