Sept 16 (Reuters) - The collapse of Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) and takeover of Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz) will cause liquidity in the credit market to shrink, resulting in lower home prices, prominent U.S. banking analyst Meredith Whitney said.
The Oppenheimer & Co analyst also expects fewer mortgages to be available for prospective homeowners, as she sees no hope for the return of the mortgage securitization business.
"All this creates a recipe for meaningfully lower U.S. house prices," Whitney said.
The magnitude of houseprice declines in the next few years could likely exceed expectations of both the markets and the companies, she wrote in a note issued late Monday.
"The fact that all banks under our coverage have unrealistic HPA (housing price appreciation) assumptions will in our opinion lead to a material and protracted writedown and capital pressure scenario for banks well into 2009," Whitney said.
Since the onsetof the credit crisis over 14 months ago, less than $100 billion worth of mortgages have beensecuritized and, accordingly, homeownership stands at 68 percent, Whitney said. (Reporting by Neha Singh in Bangalore; Editing by Anil D'Silva)
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