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Risk-aversion will hold mortgage lending at £200bn for two years – CML

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  • 19/12/2013
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Risk-aversion will hold mortgage lending at £200bn for two years – CML
The more risk-averse mortgage lending environment post-MMR is likely keep mortgage lending hovering at around the £200bn mark over the next two years, said the Council of Mortgage Lenders.

Despite increased demand, referring to the incoming Mortgage Market Review, CML chief economist Bob Pannell said compliance pressures are likely to make lenders more cautious.

“New rules hardwire in a more risk-averse lending environment for the future and so, while we expect lending to rise in line with better economic conditions, the next two years are unlikely to see lending levels getting very far above £200bn a year.”

On lending this year, he added: “Gross lending for 2013 looks set to reach £170bn – higher than the £156bn we originally forecast, but still a far cry from the £363bn experienced at the height of the lending boom in 2007.”

Gross mortgage lending in November to £17bn of gross mortgage lending in November, slightly down from October, according to the CML.

This was 4% lower than October’s figure of £17.6bn but 30% higher than the £13bn lent in November last year.

The CML’s lending forecasts out in December suggest gross mortgage lending will exceed £170bn in 2013, before climbing to £195bn in 2014 and hitting £206bn in 2015.

Jonathan Harris, director of mortgage broker Anderson Harris, said: “The year will finish off far stronger than predicted at its start, with lending volumes expected to rise into next year and 2015.

“However, we are highly unlikely to return to the boom times seen in 2007 because lenders are far more cautious than they were back then. Underwriting is tighter and borrowers are having to jump through many more hoops before they can secure funding.”

Ashley Brown, director, independent mortgage broker, Moneysprite, said: “What a difference a year makes.

“Lending conditions do look set to get slightly tougher during 2014, and rates will only be going one way, which will act as a natural check on overall loan numbers.

“But sensible lending conditions are no bad thing and are essential if we want a long-term, sustainable market.

“There will almost certainly be another dip in December but then I expect a strong first quarter, as people continue to make the most of the current mortgage deals that are now widely accepted to be living on borrowed time.”
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