The CML predicts buoyant mortgage lending in 2003 in its latest market briefing.
A slowdown in the rate of house price inflation is widely expected. The CML says: “Most commentators agree that house price growth should moderate going into 2003, with forecasts ranging from 4% to 10%.”
It adds: “With continuing strength in approvals we expect lending to remain buoyant going forward.”
Although UK inflation has nudged back above target, the CML says the Bank of England is unlikely to react by raising interest rates.
It says: “Indeed, in the November Inflation Report the Bank forecasts inflation to overshoot the target for most of 2003.
“Consequently we continue to expect the monetary policy committee to keep rates at 4% for the time being.”
The CML says that other factors of economic health remain strong – despite only a modest rise in retail sales of 0.1% for November and evidence that suggests a disappointing consumer spend at Christmas.
While food stores have seen sales boom, the latest data suggests sales were weaker than expected in non-food areas.
The CML says the spending slowdown can be attributed to an “uncertain economic climate” and the prospect of war with Iraq. It adds: “It has also been suggested that shoppers have simply wised up to the retailers' tactics and [are] waiting for the sales before buying.
“While substantial spending is needed in the coming weeks to make up for a disappointing December, latest figures suggest a brisk start to the sales.”
The CML is also confident that the labour market is robust. Employment is at a record high and there have been further falls in unemployment.