AMI predicts recovery will slow in 2010

Online - June 2010 | By Natalie Thomas

The trade body has published its first quarterly economic bulletin of 2010 setting out its view of the economy and the mortgage and housing markets.

AMI is forecasting gross mortgage lending levels for the year of between £150bn to £160bn and 620,000 housing transactions.

AMI also believes that the sharp rise in inflation last month, which saw the Consumer Prices Index jump from 1.9% to 2.9%, will subside during the year.

The trade body also says that although recovery is underway further contractions of the economy should not be ruled out.

Robert Sinclair, director of AMI, says: “Although the recovery is now underway, the mortgage market will continue to face significant challenges in 2010.

“The shortage of housing supply for sale and the continued low level of mortgage funding will continue to constrain the level of activity in the market.”

Sinclair says that the rush of completions in December to beat the end of the Stamp Duty holiday has distorted transaction figures.

He is calling for a “root and branch reform” of the current Stamp Duty system.

He says that a potential rise in remortgaging when interest rates rise poses a threat to recovery if lenders switch their focus to remortgages and away from new lending.

Sinclair adds: “If we are to see a real improvement in the mortgage market throughout 2010, the government needs to work harder to get lenders lending again.

“And the banks in particular need to ensure that the intermediary sector continues to be supported, in order to provide customers with the full range of options available to them.”