In December 2011, the CML forecast 825,000 property transactions, £133bn in gross lending and £8bn in net lending. The year is now expected to end with 930,000 transactions, £144bn in gross lending and £9bn in net lending.
Citing “cautious optimism” regarding 2013, the CML has today published a forecast of £156bn for next year.
CML chief economist Bob Pannell says: “Whereas the FLS was conceived by the UK authorities to mitigate the worst impacts of a potential fresh credit crunch, its launch has in fact coincided with a more positive external funding environment, in part due to European Central Bank actions. Given this more benign context, in our view the FLS now has the potential to underpin a modest pick-up in mortgage lending activity… A key test, however, will be the extent to which greater borrower appetite materialises in response to better credit availability.”
The CML predicts gross lending figures will stronger in 2013, accounting for 950,000 transactions and boosted by the Funding for Lending Scheme, before falling back slightly in 2014 as the Scheme winds up.
Gross lending is expected to fall back to £150bn in 2014, representing 930,000 transactions.
e.surv chartered surveyors director Richard Sexton says: “The mortgage market isn’t out the woods yet, but it is making encouraging progress. Home loans in the last three months are 11% higher than the previous three months, and reached an eleven month high in November. Rates have fallen. Banks are prepared to lend more. And there is a wider choice of high loan-to-value mortgages for first-time buyers.
SPF Private Clients chief executive Mark Harris says the Funding for Lending Scheme should start to ease conditions for first time buyers in 2013.
He says: “Record low interest rates have resulted in some of the cheapest mortgages ever seen so it is no surprise that lending volumes are slowly ticking up month by month and that the year has seen stronger lending volumes than initially forecast.
“However, the biggest barrier to home ownership remains the deposit as first-time buyers struggle to drum up the tens of thousands of pounds required to get on the housing ladder. Funding for Lending should make this easier next year, resulting in more choice at higher LTVs and better rates. It is no overnight solution but a slow burner, yet early signs are encouraging.”
But Genworth business development director Patrick Bamford says any attempts to generate higher LTV lending will be met with a series of obstables.
He says: “One of the suggested ways that some respondents believe the market could offer high LTV products is to ensure that they are only offered on long-term fixed rates however again there are considerable obstacles in the way of making this cultural shift possible including issues of borrower choice, early redemption charges, and the sense some borrowers will have of being a ‘mortgage prisoner.”