Net lending under this scenario is likely to ease back to some £4bn a year, roughly half the level experienced in the low point of 2009.
But this scenario is still likely to underestimate the impact on lending volumes as lenders may tighten criteria again in the face of lower house prices and an increased likelihood of default.
On the other hand, the liquid savings market would be slightly higher under this scenario, which would help to ease some of the difficulties of retail-funded lenders.
In summary, our main forecasts for the next couple of years are based on the assumption of only a modest rise in interest rates from the current low.
The forecast is for the required slow recovery in the market, with house prices and lending moving in a narrow range for the foreseeable future.
But only a small change in the interest rate assumption produces a dramatic shift in the prospects for the lending market – something we should all factor into our assessments.