Despite warnings elsewhere that increased mortgage advances cannot continue at their current rate, The Woolwich has estimated a rise of £1.1bn between May and June.
The forecast increase of 5%, from £21.8bn to £22.9bn, is being driven by remortgaging and a strong overall market. Year on year the £22.9bn figure for June is 24% higher than in the same month last year.
A quick end to the war in Iraq and the current hot weather is also fuelling confidence in the market according to the lender. Andy Gray, head of mortgages at The Woolwich, said: ‘It is encouraging to see that people’s confidence in the housing market has experienced an uplift after several months of steady decline before the conflict in the Gulf. This confirms our expectation of a soft landing for the housing market following last year’s double digit house price growth. We expect house price inflation will slow to around 8% by the end of the year as people’s expectations, especially in the South, are more realistic about house price growth.’
The Woolwich’s index of consumer confidence measured against house price inflation, shows that confidence has risen to 56% in June compared to 52% in May. Over the year to May, the figures reflect the poor performance that the market has seen in the South compared to better performing areas in other parts of the country.
In the period May 2002 to May 2003, confidence in the South has fallen from 74% to 54%. In the North the fall has been from 63% to 58%, while the Midlands has fallen from 65% to 55%.