IMLA members predict a challenging year ahead

01 January 2012

Intermediary Mortgage Lenders Association (IMLA) members are expecting the year ahead to be a challenging one for the UK economy with this impacting on the country’s housing and mortgage markets.

IMLA, the industry body for lenders who market their products primarily through intermediaries, conducted a member survey in December 2011, which revealed expectations for the year ahead. When asked about the growth of the economy views were varied, with some members expecting a sharp recession with GDP at -2% and others relatively positive at +1.5% but on average it is expected to continue to be sluggish with GDP at 0.91%.

By the end of 2012 IMLA members expect inflation to fall materially within a range of 2% to 4%, the average view being that inflation reduces to 2.79%. Expectations for gross mortgage lending are at no more than £130 billion in 2012 (down from the likely £138 billion outturn for 2011) and members also expect unemployment levels to remain high with some risk of further deterioration.

Speaking about the findings Peter Williams, IMLA Executive Director, said: “The survey results may look negative but represent a realistic outlook for the year ahead and remind us that we are still in very challenging times for the economy. The mortgage market remains very limited which is why intermediaries can play such an important role to help inform consumers about the best products available and what is right for them. Matching lenders and products to consumers is crucial to ensure sustainable lending and improve the market. Council of Mortgage Lenders’ figures show that intermediaries accounted for nearly two thirds of sales; 64% of first-time buyer loans, 57% of remortgage loans and 52% of home mover loans, during the third quarter of 2011.”

Whilst the next year might look gloomy, the five year view from IMLA members is somewhat more optimistic. By 2016 members are expecting base rates to have risen to 2.83% and the average price of a UK home to be around £178.3k (in November 2011 the price was around £163k according to Council of Mortgage Lenders’ figures). Members are confident that the role of the intermediary will remain important and expect intermediaries to hold 59% of the first-time buyer market, 60% of the remortgage market, 51% of the home mover market and 82% of the buy-to-let market by 2016.

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