Despite the fact that economic uncertainty and falling house prices in many areas of the UK, mortgage lending has fourth consecutive year-on-year increase according to the Council of Mortgage Lenders. Their latest figures (published on Thur 15th Dec) revealed that gross mortgage lending in the UK during November reached an estimated £13billion.
The November 2011 total shows a 5% increase on the figure recorded for October and a 13% increase on the figure recorded for November 2010.
According to reports on Property Wire, the CML has forecasted that gross UK mortgage lending in 2011 will total £138billion, with net lending of £9billion.
Looking ahead to 2012, the CML has recently recalculated its growth estimate to reflect the likelihood of an unstable economic backdrop. Their new central forecast is for £133billion of gross lending and £5billion of net lending.
The CML has also predicted a low level of housing transactions during 2012 – around 825,000.
Bob Pannell, CML Chief Economist, Commented:
‘’The weak state of the wider economy and household finances creates a challenging and highly uncertain backdrop for the housing and mortgage markets. Despite the fact that activity levels have already been subdued for several years, we have pencilled in a broadly flat picture for both mortgage lending and property transactions at least until real incomes show signs of stabilising.
But, if European leaders if maps a comprehensive and sustainable way to get through Eurozone problems, current financial market stresses could heal and the previous pattern of gradual improvement in cost and availability of funds could re-emerge – relatively quickly. This in turn could have a major benefit on UK growth prospects and boost household confidence and appetite to borrow.’
As this has become the norm during the past year, the prime London property market has appeared to be bucking the trend and confidence amongst agents which is still high.
Liza-Jane Kelly of Marsh & Parsons remarked:
‘While the CML holds a more negative outlook for the national market in the coming year, we anticipate another encouraging performance from London’s housing market. In the last month alone, we’ve seen a 21% annual increase in the number of properties placed under offer, as a committed corps of wealthy international and domestic buyers look to move money from more volatile investments into the capital’s bricks and mortar. As the debt crisis in Europe continues in the New Year, we expect this trend to continue, helping drive activity in prime London in 2012.’
However, the prime London property market is not representative of the UK housing market as a whole.
David Whittaker, MD of Mortgages for Businesses commented:
‘As the CML suggests, the economic backdrop will keep residential activity subdued in 2012, which directly means that the private rental sector will continue to grow in importance.’
Source: Property Wire.