24th January 2012
December stats hopeful but housing market uncertain, says CML
Mortgage lending showed a marked increase in December, but the housing market outlook for the year ahead remains unclear, says the Council of Mortgage Lenders (CML).
Gross mortgage lending in December 2011 was at £11.7 billion, a 12 per cent drop from the previous month but a 12 per cent rise from December 2010.
However, the uncertainty of UK economic growth means that short term prospects remain challenging.
CML chief economist Rob Pannell said: "Continuing eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call."
The CML hopes that inflation pressure will ease this year and that first time buyer activity will pick up before the current stamp-duty exception deadline at the end of March.
Pannell added: "There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year."
However, the CML also believes that financial uncertainty will cause worried banks to crack down on lending in the coming year.
It is expected that gross lending from banks and building societies will fall at least five per cent from last year to £133 billion.
The CML has also warned that the number of homeowners seeing their property repossessed is likely to rise this year.
Communications manager Bernard Clarke believes that this will arise through a combination of financial pressures and rising unemployment, which will leave many people unable to pay for their homes.
"An increase in the number of people falling into arrears is likely to result in an increase in the number of cases of repossession," he said.
Mr Clarke forecast a 2.5 per cent increase in the number of mortgages that will be in arrears by the end of 2012, taking the total from 166,000 to 180,000 in 12 months.
Posted by Victor Onuohae
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