Speaking to the Treasury Select Committee yesterday Carney said the withdrawal of the Funding for Lending Scheme (FLS) for mortgage lending, would have a “deceleration” effect in around two years.
He said: “The general expectation is a continuation of current momentum, house price momentum, mortgage activity and credit growth momentum into 2014 before deceleration around the middle of 2015 towards 2016 […] more approximating the rate of growth in incomes.”
The announcement in November last year of the exclusion of mortgages from FLS followed analysis carried out by the Bank which indicated that the impact on the mortgage market would be “slightly less rapid growth”.
He described the decision as the Bank taking its “foot off the accelerator and not putting its foot on the brake”.
The prediction of a 2016 cool down comes after a survey from the Intermediary Mortgage Lenders Association found that 60% of brokers said growth in the market had come quicker than expected while 86% of lenders echoed this sentiment.
NatWest’s intermediary market confidence barometer also showed that brokers’ confidence in the market had increased “significantly” in the last six months particularly in the areas of house price growth and demand for remortgages.
