Further lending growth predicted
The regulatory pressure placed on lenders to improve their capital positions is likely to see mortgage lending continue to grow over the coming year, according to the Association of Mortgage Intermediaries (AMI). In its latest Quarterly Economic Bulletin, the association predicted gross lending for 2009 will total £145 billion before rising to between £150 billion and £170 billion in 2010. However, while acknowledging that the housing market recovery seems to be holding, the trade body said it was unlikely that pre-recession levels of lending would ever return. Meanwhile, the report also noted that while the recent drop in demand for remortgages should have left sufficient funds available for those looking to move home, first time buyers were still limited by the size of deposits required. "The stability in prices we have seen in the last few months may have much to do with the limited supply of quality property coming on to the market," added Robert Sinclair, director of AMI. "A serious concern now must be the number of people on base-rate linked default rates, who are effectively property prisoners for the foreseeable future, as moving would be economic suicide." More encouraging, he added, was that the trend line on arrears for this stage in the economic cycle looks positive. "This is probably due to those on fixed and default rates still having affordable mortgages. As long as unemployment stays in predicted boundaries, this will continue to underpin the market."