The crisis in the Eurozone and US are creating increasing problems for lenders, said Finlay, at the Mortgage Vision event in Holborn in London yesterday.
Finlay said Barclays Capital adjusted its next interest rate prediction a few weeks ago, pushing it further out from 2012, to a 0.25% rise to 0.75% by 2013.
The lender suggests gross mortgage lending will be £130bn in 2011, or £10,000 less than the CML’s £140bn prediction, £130bn again in 2012, but will rise to £145bn and £180bn in 2013 and 2014.
Consumer confidence will remain at low levels, but the remortgage market will revive as soon as rates rise. The bulk of “free to go” borrowers are holding SVRs of between 80 to 100%, which means brokers should be “keeping client relationships warm now,” he added.
But, despite the challenging economic environment, “we are over the worst,” he added.
“A rate rise will be all we need with a huge number of mortgage borrowers still sitting on SVR,” said Finlay.
And finally, he quoted Evening Standard columnist, Anthony Hilton, who called for some perspective on the recovery in last night’s paper.
“If you think this is bad, think back to the last recession,” he said, when inflation was at 22% and the top rate of tax at 87%.
“It doesn’t feel much like the recovery now, but when we look back in five or so years time, it may look a little different,” said Finlay.
