My Introducer: CML forecasts an estra 12bn of gross lending in 2013
Thu 20 Dec 2012
The CML today estimates that gross lending in November was around 12.9bn, and publishes its market forecasts for 2013-14, alongside a self-evaluation of the mortgage market based on interviews with the UK's mortgage lenders.
Overall, there are grounds for optimism that the market recovery which began this year should continue next year, reinforced in part by Funding for Lending scheme effects.
This time last year, the CML had forecast that 2012 would see 825,000 property transactions, 133 billion of gross lending, and 8 billion of net lending. In fact, activity was stronger than we expected, and we now expect to end 2012 at 930,000 transactions, 144 billion of gross lending and 9 billion of net lending. While these activity levels remain far below the abnormal boom experienced before the financial crisis, they do provide a springboard for cautious optimism for 2013.
The CML's central forecast is for 950,000 property transactions, 156 billion of gross lending, and 12 billion of net lending in 2013, falling back a little in 2014 after the FLS drawdown window ends to 930,000, 150 billion and 11 billion respectively.
CML chief economist Bob Pannell comments: "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 is also pleased to observe that mortgage arrears have been lower than originally forecast for 2012, and the number of repossessions is likely to end the end year at 35,000, some 10,000 lower than forecast. The CML's central forecast is for 35,000 repossessions in 2013 and 37,000 in 2014.
Alongside the market forecasts, the CML is today also publishing its report based on the industry self-evaluation in which CML members participated this year. Based on interviews and surveys with lenders, the report gives an insight into what the UK's mortgage lenders think about their market, where it has come from and where it is going. The CML hopes it will contribute to a wider debate about housing policy, and the role of lenders in delivering sustainable housing finance across all housing tenures for the long term.
Paul Smee, CML director general, comments: "Our forecasts point towards a market that will both grow and improve in 2013. Sustainable growth will characterise the market of the future. We look forward to helping both lenders and policymakers stay focused on delivering a market that provides protection and flexibility to meet the needs of real consumers, and the report that we publish today shows ways in which this can be encouraged to happen." Mark Harris, chief executive of mortgage broker SPF Private Clients, 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.
"It is worth remembering though that while rates may fall, criteria are likely to remain tight so meeting these could still be an issue for many borrowers and will keep growth in the market in check next year."
Peter Rollings, CEO of estate agent Marsh & Parsons, comments: There are signs that the mortgage market is finally finding its feet, as gross lending rose for a second successive month in November. And with banks and building societies rushing to hit end of year lending targets, December is likely to see a healthy total too. The impact of the Funding for Lending scheme is clearly starting to be felt, and thousands of buyers have been taking advantage of the cheaper rates on offer to move before Christmas.
However, the concern remains that it is not yet hitting the mark with those without substantial deposits. For lending in 2013 to hit the CMLs more optimistic estimate, lenders will need to redouble their efforts to target first-time buyers with higher LTVs, or we will see the lower tiers of the property market fall even further behind the top tier in the New Year.