During December and January I had my annual meetings with all the major lenders on their plans for mortgage lending this year – and I can report good news.
Having totted up all the promises we can expect gross lending to make £200bn this year.
If this makes you smile as it did me, it also highlighted our ongoing real problem as an industry – lack of funding.
In reality we should expect circa £135bn. This more realistic figure illustrates how little funding there is for mortgage business and throws into sharp relief how many mouths this sum has to feed.
The likely strains on funding go beyond the demands of residential house purchases. Refinancing existing borrowing aside, any base rate movements this year will open the floodgate for remortgages.
There is growing demand in buy-to-let as tenants exceed the supply of properties and there is the issue of maturing interest only loans. Suffice to say there are a lot of candidates for the £135bn.
Lenders’ woes are well documented but any difficulty correcting balance sheets and getting lending back to something near normal is compounded by new capital adequacy requirements from regulators.
Closing wholesale markets and the current political and economic desire to deleverage asset classes of all types means our situation is not going to change in the near future.
All is far from lost but with so many fighting over so little expect a bumpy ride.