Recession not expected, says IMLA survey

A survey by the Intermediary Mortgage Lenders Association reveals 44% of respondents expect two quarters of negative economic growth, but none expect a recession.

Brokers who responded to the survey agreed that the mortgage market is becoming less positive with almost eight in 10 saying conditions are worsening.

IMLA says brokers in the South-East are markedly more positive about the outlook than those in other parts of the country. In this area, around 22% say conditions remain unchanged, compared with only 16% in other regions.

Peter Williams, executive director of IMLA, says: “Times are tough in the mortgage market, but key participants in the industry remain confident that we can steer clear of an all-out recession. There are also pockets of greater optimism – surprisingly enough, in the South-East, for example.”

According to IMLA’s lender panel, house prices will fall by an average of 2.8% over the coming year, and as house prices fall and consumers’ finances come under greater pressure, the majority of lenders anticipate that arrears and possessions will rise slightly.

Among brokers, 47% expect house prices to decline, but 43% anticipate stable prices while just over 3% think prices will rise.

Williams adds: “We are in a phase of re-adjustment in the markets but that doesn’t mean we’re heading for a house price collapse or a recession.

“We need to see more liquidity in the money markets and the Bank of England’s action in cutting base rate and in providing the £50bn swap facility is a good start.”