CML publishes April mortgage lending figures and forecasts for 2008
According to the latest Council of Mortgage Lenders (CML) report, Gross mortgage lending hit £25.3 billion in April which is a 5 per cent increase on March but an 8 per cent decline when compared to April 2007.
The combined March and April figures for this year are 16 per cent down on the same 2 months in 2007 and the CML has also today published an update on it’s housing market forecasts for 2008, and here are the main points;
- House prices to be around 7% lower at the end of the year than at the end of 2007;
- Property transactions in England and Wales to be around 35% lower than last year at 770,000;
- Gross lending to be around 21% lower than last year at £285 billion;
- Net lending to be half last year’s level at £55 billion; and
- Bank base rate to end the year at 4.75%.
So this isn’t really the ‘end of the world’ doom and gloom predictions we’ve seen in the media recently. Yes there has been a sudden slump in the housing and mortgage market becuase of the US credit crunch but perhaps now house prices will not rise at the extraordinary rate we’ve been used to for the best part of the last decade.
As for mortgages and borrowing, I think the credit crunch has served as a massive warning sign to people in the UK when it comes to managing personal finances, including your mortgage. People cannot continue along the ‘borrowing from peter to pay paul’ route. If they do lenders will simply refuse to lend to them, wether that is a mortgage, a loan or a credit card.
Tightening lending criteria by lenders is a good thing because it will stop the people who should not get credit, or additional credit, from getting it! Something that perhaps the banks should have thought about a bit more over the last decade.
Director general of the CML, Michael Coogan, said: “In the wake of the credit crunch, 2008 will be remembered as a very weak year in the housing market. But our forecasts assume some indirect benefits from the Bank of England special liquidity scheme beginning to have an effect in the mortgage market in the later part of the year. Over the next few months, lending volumes will get worse before they get better. The market is still very uncertain, but lenders are working hard to ensure that borrowers coming off fixed rates remain on track, that arrears and repossessions are minimised, and that pricing is as attractive as they can make it in a market where they must manage the demand for lending with caution.”
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