IMLA, the industry body for lenders who market their products primarily through intermediaries, reported in January that members expected 2012 to be challenging and their consensus has not changed. Almost three-quarters (73%) of members think the Bank Base rate will still be at 0.5% in June 2013. In addition, they expect growth to remain sluggish with GDP only at 0.55% in 12 months, whilst this view is lower than the January survey (0.91%) the range of views was more positive (0%-1.25%). Lenders also expect house prices to remain more or less static with an average price prediction of £160,000.
On the mortgage market, lenders are realistic not optimistic, predicting gross mortgage lending for 2012 of £131 billion, higher than their January prediction (£130 billion) but still £10 billion lower than 2011 gross lending (£141 billion). They have higher expectations for buy-to-let predicting £15.1 billion gross lending by the end of 2012, up from £14 billion in 2011. In addition, lenders expect the highest proportion of intermediary business in 2012 to be in buy-to-let.
Peter Williams, IMLA Executive Director, comments
“Given recent developments in the economy it is no surprise that our member predictions remain subdued. In addition, in the first half of the year there have been a number of announcements that may impact the mortgage market including the Governments ‘Funding for Lending’ announcement and the ECON vote on the European Mortgage Directive. Whilst the outlook may seem bad it is important to emphasise that the survey does not indicate a further downturn, but rather a flat market for a period. Given all the uncertainty, we must watch developments closely to see which way the market will move. The Council of Mortgage Lender’s gross lending figures show a 24% increase in May but they also acknowledge that the market is broadly flat and suggest ‘it may be the autumn before we can more accurately gauge the state of the market’.
“Our members include banks, building societies and specialist lenders whose business models include retail funded, wholesale funded, private capital and asset backed finance. So we are close to the markets and are well placed to comment. We follow the mortgage market and the economy closely and will continue to champion the important role of the intermediary in matching consumers with mortgages.”