Analysis: Benign backdrop will aid borrowing

Stephen-Smith-MM-Peach-700.jpg

The Council of Mortgage Lenders’ half-year market commentary has much in it to make intermediaries smile. Taken alongside falling unemployment data and a jump in confidence last month based on wage growth and low inflation, the outlook for borrowing ought to be good for many months to come.

So despite the CML revising its gross lending forecast for this year down from £220bn to £209bn, H2 will see a recovery in activity levels likely to continue into 2016, despite the probability of interest rates starting to rise.

On the downside, the continued rise in house prices will make saving for a deposit harder and those lender affordability calculations more difficult. But that brake on activity is likely to be minor in the face of continued undersupply of property to buy.

In addition, the statements by Bank of England governor Mark Carney about imminent rate rises should provide a much needed stimulus to the remortgage market.

The immediate future is looking good and plans for the next couple of years should be able to be made with a degree of confidence. 

As the CML commentary says: “A benign economic backdrop should underpin a gentle improvement in housing and mortgage market activity.” 

We can live with benign.