Gross mortgage lending likely to fall in 2012, says AMI
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The Association of Mortgage Intermediaries is predicting gross lending of between £130bn and £135bn in 2012.
In its latest Quarterly Economic Bulletin it says gross mortgage lending in 2011 is set to match £136.3bn in 2010, but will fall to between £130bn and £135bn in 2012.
The report says there are a lot of prospective homemovers who are unable to move owing to insufficient or negative equity.
The report says: “Insufficient equity blocks the market because tighter lending criteria mean many borrowers end up without the borrowing capacity to get a mortgage.
“Someone who bought on an 85% LTV in 2007 would now have only around 5% equity, nothing like enough to remortgage or move up the housing ladder.”
The average purchase LTV in 2007, for example, was 80% so many borrowers from that year will be in this position and anyone on an interest-only mortgage would be more exposed still.
The report says brokers and lenders are seeing enormous levels of enquiries about mortgages, many from first-timers.
But these volumes don’t show up in the final mortgage numbers because so many fail to qualify for the products being marketed.
The report adds: “The professed desire among some prominent lenders to take more market share is not translating into growth in the market overall. Net lending is similarly flat and likely to be close to £8bn this year, and somewhere between £0 and £10bn next year too. The number of outstanding mortgages has now fallen below 10 million for the first time in at least ten years.”
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