08 May News from the Council of Mortgage Lenders …
It says net lending is likely to be around £6 billion in 2011, down from the estimated £9 billion this year and £12 billion in 2009.
Gross mortgage lending in 2011 will be very similar to this year at around £135 billion. Those figures are down from £143 billion in 2009, £253 billion in 2008 and £363 billion at the peak of the market in 2007.
The CML does not think the UK go into a double dip recession and expects growth in UK output of a little over 2% next year. It believes base rate could remain at 0.5% for the whole of 2011.
The CML says that low interest rates will help the vast majority of households to manage to keep up with their loan repayments and help keep mortgage arrears and possessions in check. However, it forecasts repossessions and arrears of 2.5% or more of the outstanding balance will go up next year.
It estimates that 175,000 mortgages will be in arrears this year, down from 196,400 in 2009 but will go up again in 2011 to 180,000. This means 1.58% of mortgages will be in arrears, up from 1.54% in 2010.
Repossessions for 2010 should be around 36,000, down from 47,700 last year, but will nudge up in 2011 to 40,000.
Residential property transactions at their peak reached over 1.6 million a year but sales are likely to be around 890,000 this year and fall further in 2011 to 860,000.
The recent level of sales means that each property in the UK’s stock of 18 million privately owned homes is now only changing hands at a rate of once every 20 years.
Low interest rates and flat or modestly falling house prices will continue to keep remortgaging levels low.
From April next year, lenders will begin to have to re-pay government funding and this is likely to limit the availability of credit to support mortgage lending.
Sarah Cassidy, Managing Director at Place said “The CML data could be seen as being a little negative but in reality they are predicting a similar number of transactions to 2010 which actually means that the market will improve from its current standing at the end of 2010.
Economic growth is forecast and it is now some six months since we officially came out of recession and yet interest rates are forecast to remain at their lowest levels for years.Obviously there are concerns for somefacing employment uncertainty and mortgage lending will remain tight butthe market looks as if it will slowlyand steadily improveas 2011 progresses.
There is considerable pent up demand from buyers and those sellers whoare realistic in their pricing will secure sales. 2010 has been a very positive yearat Place and we are confident that our unique approach will achieve the right results for our clients in 2011.”