“Today’s announcement offers reassurance that the Bank of England has taken stock of the improving economy and its decision to revise its forward guidance policy is a sensible move. As Mark Carney noted, we have seen a significant strengthening of the housing and mortgage market in the last six months – but this has happened from such a low base that both mortgage lending and house prices remain well below historic levels in real terms. Fears of a bubble have been greatly exaggerated.
“The initial focus on the 7% unemployment threshold was never a trigger and always intended as a point to reassess. The unemployment rate is mainly relevant because of its influence on wages, and it should not surprise anyone that the Bank is monitoring 18 economic indicators overall. This is prudent policy and no more than is required to safeguard the recovery.
“Confirmation that the bank rate will remain low until spare capacity in the economy has been absorbed should help to support a continued revival in mortgage lending, which remains supressed. Housing is one of the most interest rate sensitive sectors of the economy, and competitive rates have played a significant role so far in the relatively modest recovery without prompting irresponsible lending. There is a long way still to go – both in the mortgage market and in the wider economy – so the Governor is absolutely right to avoid the trap of considering the job done.”
IMLA’s report on mortgage lending in 2014/15 – What is the new ‘normal’ — Mortgage lending in 2014–15 and the march back to a sustainable market – was released today. A full copy of the report is available on request.
For further information please contact:
Andy Lane / Sinead Meckin, The Wriglesworth Consultancy
Tel: 0207 427 1422/29 / Email: imla@wriglesworth.com
Notes to Editors
About IMLA
The Intermediary Mortgage Lenders Association (IMLA) is the trade association that represents mortgage lenders who lend to UK consumers and businesses via the broker channel. Its membership of 52 banks, building societies and specialist lenders include 18 of the 20 largest UK mortgage lenders (measured by gross lending) and account for about 90% of mortgage lending (91.6% of balances and 92.8% of gross lending).
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