CML slashes lending forecast for 2015

CML slashes lending forecast for 2015

The Council of Mortgage Lenders has revised its gross lending expectations down to £209bn in 2015, from its earlier estimate of £222bn.

This was based on expectations that regulated house purchase activity will slowly retrace its 2014 levels through the second half of this year and into 2016, supported by a benign economic backdrop and government housing measures.

Remortgage appetite continues to be subdued, except in the buy-to-let space, the CML also noted.

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The prospect of higher rates will eventually provide a stronger incentive to remortgage, but the council stated this was not likely to happen to a great extent during the forecast period, as the country will still be in the early stages of rate tightening.

Although activity levels are likely to remain narrowly constrained this year and next, the CML said it still expects total mortgage lending to increase by £21bn to £230bn in 2016.

Some of this reflects increasing loan sizes, alongside stronger house prices, but about half of the increase is due to the modest turn-round envisaged in the numbers of first-time buyers and home movers.

The revision forecast for lending comes as the CML also reported gross mortgage lending in June showing a significant increase compared with the previous month - up by 29 per cent to an estimated £20.5bn.

In addition to the month-on-month increase, there was also a year-on-year increase of 15 per cent on the £17.8bn of lending undertaken in June 2014.

Gross lending in the second quarter of 2015 came to £52.2bn, which was up 17 per cent from the previous quarter’s £44.5bn, and was a modest increase of 1 per cent on the second quarter in 2014, when it totalled £51.7bn.

CML economist Mohammad Jamei said that activity was picking up after a slow start to the year, with the underlying picture likely to be one of only modest recovery.

“This should be supported by favourable conditions in the economy, though it will be limited by rising house prices and affordability pressures.”

The CML’s latest forecast came as Nottingham Building Society revealed two out of five brokers have seen an increase in customers giving up on applications because of delays.

Their survey found that brokers have reported a rise in customers giving up on remortgage and mortgage deals because the process has become more time-consuming and difficult, while 58 per cent expected an increase in remortgaging enquiries.