CML predicts rise in mortgage lending and repossessions in 2012
The Council of Mortgage Lenders (CML) has warned that house repossessions are likely to rise this year and again in 2012.
In 2010, there were 36,000 repossessions representing just 0.32 per cent of all mortgages. It expects this to increase in 2011 to 40,000 or 0.ȃ per cent and to rise again next year to 45,000 or 0.40 per cent of all mortgages.
However, the number of people in arrears will increase only slightly from 170,000 in 2010 to 180,000 in both 2011 and 2012, according to the prediction. This is lower than the level of mortgage arrears in both 2008 and 2009.
The organisation has issued an update on its expectations for the property market, and for the first time since the downturn its predictions go beyond the current calendar year.
Access to funds from lenders to allow people to get mortgages is also expected to be depressed well into 2012, according to the CML. There were 886,000 mortgage transactions in 2010 but this is predicted to fall to 840,000 in 2011, before recovering to the 2008 level of 900,000 in 2012.
The CML has based their predictions against a background of low economic growth for the rest of the year and low consumer spending as real incomes fall due to higher inflation.
The CML expects the Bank of England to keep base rate at 0.5 per cent for most of the rest of 썛 before a “modest progressive tightening that continues through 2012.”
On lending levels the CML said: “Although recent Bank of England credit conditions surveys indicate an ongoing improvement in credit availability, the underlying position remains challenging. Under such conditions, lenders will continue to have only a modest risk appetite, and this will limit lending at high loan-to-value (LTV) ratios.â€�
The CML also predicted a busy buy-to-let market. It said: “Buy-to-let seems likely to progress positively relative to the overall market, reflecting strong rental demand.”
