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AMI casts doubt on CML gross lending forecast

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  • 21/07/2011
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AMI casts doubt on CML gross lending forecast
The Council of Mortgage Lender’s (CML) forecast of £140bn gross mortgage lending for the year is “a little optimistic”, the Association of Mortgage Intermediaries (AMI) has said.

AMI’s latest Quarterly Economic Bulletin said that the forecast will fall short because gross lending reached £56.4bn in the first five months of 2011, implying an annual total of £136bn.

The CML revised its gross mortgage lending forecast in June from £135bn to £140bn for the year.

The report said that monthly lending would have to be 6% higher than it currently is to reach the target.

AMI said: “This is unlikely to be achievable given the likely weaker conditions in the second half [of the year].”

Robert Sinclair, director of AMI, said: “The squeeze on household incomes is depressing demand despite the fact it is now clearly cheaper to buy than rent in most parts of the UK.

“With interest rate rises off the agenda for some time, borrowers have little to fear in the short term from rising mortgage costs.”

Sinclair added that AMI continues to push back its expectations for rate rises each quarter.

He said: “Swap rates suggest February 2012 is when the Bank will increase them, but we think it could be even later than that.

“Figures from the Bank of England’s Financial Stability Review also show there are still significant risks on bank balance sheets, with some demonstrating substantial exposure to high and very high LTV secured debt.

“Dealing with this level of exposure will make it more difficult for them to expand their balance sheets and comes at a time when they are under political pressure to lend more.”

However, Sinclair added: “Despite the obvious difficulties, we’ve now had three years of dealing with a fragile market. While there are likely to be bumps in the road ahead, we should be encouraged that a level of stability has crept back into the market.”

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