Next year’s predicted lending is significantly down on the CML’s forecast of £150bn just six months ago.
It reflects the “weaker economic backdrop that now seems likely” and that will impact on mortgage funding availability and costs throughout some or all of next year, the trade body said.
Net mortgage lending is predicted to reach £9bn by the end of this year, unchanged on the CML’s June forecast. However, 2012 net lending is now expected to reach just £5bn, less than half the £12bn previously predicted.
In addition, housing transactions will continue to bear the brunt of the effect of economic uncertainty, totalling an expected 825,000 in 2012 – 75,000 less than previously predicted – and down from the estimated 2011 total of 852,000.
Nevertheless, the CML has not revised its arrears and repossessions forecasts for next year, which remain at 180,000 and 45,000 respectively for 2012.
CML figures released today revealed that gross mortgage lending in November was an estimated £13bn, up 13% year-on-year and up 5% on October.
CML chief economist Bob Pannell said: “The weak state of the wider economy and household finances creates a challenging and highly uncertain backdrop for the housing and mortgage markets.
“Despite the fact that activity levels have already been subdued for several years, we have pencilled in a broadly flat picture – for both mortgage lending and property transactions – at least until real incomes show signs of stabilising as inflationary pressures recede.”
He added: “As a by-product of sovereign debt worries, lenders face challenging conditions in wholesale funding markets and these could have negative effects on the cost and availability of UK residential mortgages through some or all of next year.
“But, if European leaders navigate a comprehensive and sustainable way through eurozone problems, current financial market stresses could heal – and the previous pattern of gradual improvement in cost and availability of funds re-emerge – relatively quickly.
“This in turn could have a major benefit on UK growth prospects and boost household confidence and appetite to borrow.”
Charles Haresnape, managing director of Aldermore Residential Mortgages, said: “£133bn in 2012 matches the concensus across the lender sector. There will be lots of headwinds next year and this figure could well prove to be optimistic.”
Nevertheless, Paul Hunt, managing director of Phoebus Software, said: “Rather than running for the hills, lenders have shown they are prepared to take advantage of the Bank’s commitment to a dovish monetary course, offering record-breaking low rates and boosting gross lending by 13% in the year.
“It’s right to point out that 2012 may not bring a fair wind to the market, but the industry can take heart that lenders have shown in 2011 they are not easily spooked.”
