News Review
First-time buyers hopeful despite the gloomy e By Sarah Davidson
2012 looks set to be a year of low lending with several economists
predicting
the UK will fall back into recession. Last month the Council
of Mortgage Lenders cut its 2011 gross mortgage lending forecast down to £138bn from £140bn and slashed its 2012 forecast down to £133bn from £150bn. The lender trade body
said the weaker economic backdrop would cause continuing low levels of housing transactions with an estimated 852,000 transactions likely to take place in 2011. Its central forecast for transactions in 2012 is also now lower at 825,000. Fears over the eurozone
continue to weigh on confidence and the OECD has predicted a 0.03% contraction in British Q4 2011 GDP and a further 0.15% in the first three months of this year. It expects the UK to grow
by 0.6% in 2012 overall though the group also sees unemployment rising from
8.1% in 2011 to 9.1% by 2013, even as the economy recovers.
Meanwhile Legal &
General believes the UK will experience three quarters of negative GDP growth in 2012. It is less sanguine than the OECD claiming growth will be -0.4% in 2012 and only 0.5% in 2013. Bob Pannell, chief economist at the CML, 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. “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.”
Some good news But it isn’t all doom and gloom with research from the Building Societies Association revealing 44% of consumers think now is a good time to buy a home compared to one in four who think it’s not. The mutual trade body said around one in eight
Variable. Fixed. Discount. BTL products.
4 MOrTGAGE InTrODUCEr JANUARY 2012
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