The Council of Mortgage Lenders says it expects house price growth to slow to an annual rate of 8% by the end of the year.
In its fortnightly News & Views publication, the CML also forecasts that mortgage lending will remain strong, but that growth will be much slower than in recent years.
It also expects remortgaging to continue to be popular as the prospect of higher interest rates encourages borrowers to search out better deals and to switch from more expensive unsecured loans. It adds with interest rates increasing and house price rises continuing tooutstrip growth in earnings, the number of transactions is likely to be close to the low level seen in 2003.
In addition, the CML forecasts that arrears, currently at a 20-year low, may begin to rise modestly during the year and that affordability will continue to be a problem for first-timebuyers, many of whom are struggling to find a large enough deposit to buy a home.