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UK kicks off biggest housing review in more than a decade

CML UK expects improved mortgage market activity

According to the latest forecast from the Council of Mortgage Lenders, A benign economic backdrop should underpin a gentle improvement in housing and mortgage market activity in the coming months.

Propertywire.com reports that the CML market review report pointed out that this follows a softer patch over the past year, which has dragged down our expectations for gross mortgage lending to £209bn this year, from the £220bn the CML had expected previously.

“Several of the government’s fresh housing initiatives will take time to take effect and so do not fundamentally reshape market prospects this year or next, as far as we can judge at this stage,” said Bob Pannell, CML chief economist.

The report explained that with house price levels already elevated and continuing to outpace earnings across much of the country, the upside potential for regulated lending is likely to be constrained by affordability pressures, reinforced by the recent MMR mortgage rules and macro-prudential rules.

It also pointed out that perceptions of the buy to let sector can be distorted by the fact that remortgage activity accounts for a much larger share of overall buy to let lending, more than half, than is the case for home owner loans.

Pannell stated, “Although buy to let business volumes continue to expand, the underlying pace of growth in buy to let activity, both for house purchase and refinancing, has been slowing, following its strong recovery over the past few years. Policy interventions in the buy to let space may reinforce this downward trend.

“We expect a further improvement in arrears and possessions this year and anticipate that the overwhelming majority of borrowers will cope with the modest interest rate increases that start in 2016.”

Overall the CML is slightly more optimistic about housing market developments than it was at the turn of the year and Pannell explained that this is largely because of the continuing resilience of cash transactions, amounting to nearly 37 per cent of all transactions over the past year.

He added that regulated house purchase activity has continued to edge down relative to the market as a whole over the past year, and this has acted to drag down our overall mortgage lending total for 2015.

“We now expect gross lending of £209bn, compared with our earlier estimate of £222bn,” he said.


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