View more on these topics

CML: Mortgage market to grow 15% to £195bn next year

The mortgage market is forecast to grow by nearly 15 per cent next year to £195bn.

Today’s prediction from the Council of Mortgage Lenders shows how much the market’s fortunes have transformed over the past 12 months, as a year ago it predicted gross lending would fall back from £156bn in 2013 to £150bn next year.

The trade body has also today revealed it believes lenders advanced £170bn this year – some 8.9 per cent more than the £156bn it forecast for 2013 last December.

Lending is forecast to continue growing in 2015, with the CML predicting lending of £206bn.

The CML anticipates net advances to rise from £10bn this year, to £15bn next year and £20bn in 2015.

However, the CML says an “unbridled” housing boom is unlikely and lending is still low by historical standards, with gross lending still less than half of what it was in 2007, when gross lending peaked at £362bn and net lending reached over £100bn.

Table: Gross and net mortgage lending (£bn)

Gross and net mortgage lending (£bn)

The CML believes the number of mortgages 2.5 per cent or more in arrears is likely to stay stable next year at around 150,000 but rise modestly to 160,000 in 2015.

The number of repossessions is expected to fall from around 30,000 this year to 28,000 next year, before returning to 30,000 in 2015.

However, the CML’s forecasting horizon covers a period when the Bank of England may consider increasing interest rates. The trade body says that while this is likely to have a greater impact from 2016, the benign period of falling arrears and possessions may be coming to an end – although it says most households will cope with the transition to more normal interest rates.

The CML suggests that the volumes of business written under the new Help to Buy mortgage guarantee scheme may be relatively modest as it does not become fully operational until January 2014.

CML chief economist Bob Pannell says: “Gross mortgage lending climbs above £190bn next year, its highest level since 2008. While this is largely on the back of the continuing revival in housing market activity, we also expect to see a meaningful turn-round in remortgage activity.

“Despite a strong pick-up in gross mortgage lending, we have pencilled in relatively modest net lending figures – £15bn in 2014 and £20bn in 2015. While this would mark a climb out of the sub-£10bn doldrums, where the market has languished since the credit crunch, it does nevertheless represent a rather muted position.

”This reflects, among other things, our view that some households will use the relatively benign economic conditions to prioritise debt repayments, ahead of medium-term interest rate rises.”


‘GCT rethink will see sales flood’

Plans to reduce the capital gains tax exemption period for second homes from 36 months to 18 could result in a flood of properties being sold back on to the market and boosting housing supply. The capital gains tax exemption applies to a property that has been a person’s private residence at some point,  even […]

Report describes MAS as ‘not fit for purpose’

The Treasury select sub-committee last week described the Money Advice Service as “not fit for purpose” and in need of a “radical overhaul” as part of a damning inquiry into the future of the service. On 3 December the Treasury select sub-committee published its report into the effectiveness of MAS following a year-long inquiry. MPs […]


Economic tracker: High-street brands not the only option

There’s no doubt about it – the buy-to-let market continues to grow and the latest CML figures for quarter three show a 16 per cent increase in loans advanced on quarter two. The loans themselves were worth £5.7bn, up 19 per cent on the previous quarter. The reasons for this increase are many and varied […]

Show me the money – earnings are central to performance in Europe

Equity markets globally currently remain vulnerable to sharp shifts in sentiment caused by either unexpected or unwelcome outcomes in key upcoming political events (the US and German elections, Brexit and the Italian referendum). These top-down influences, combined with the current low global growth environment, will likely lead to broadly directionless markets, and prolong the current low beta return environment. We do, though, […]


News and expert analysis straight to your inbox

Sign up