CML expects slow recovery

By Nia Williams

13 Nov 2009

The CML forecasts that:

The number of housing transactions will reach 810,000 this year and 850,000 next year
Gross lending will total around £141 billion this year and £150 billion next year
Net lending will be modestly positive this year at £8 billion (revised from a negative expectation of minus £5 billion previously), and £15 billion next year
Assuming interest rates remain at their current low levels, the number of mortgages 2.5% of balance or more in arrears will end the year at 195,000 (down from previous forecast of 360,000), and will rise only modestly next year to 205,000.
The number of repossessions this year will total around 48,000 (0.43% of all mortgages) and around 53,000 (0.48%) next year.

Commenting, CML director general Michael Coogan said: "We are glad to have been wrong on our previous forecast for mortgage repossessions this year. Low interest rates, and lenders' forbearance policies, have helped to cushion many households facing financial problems. And although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time.

"In terms of new lending next year, we expect a modest increase. But it is difficult to see the case for a dramatic upturn in the absence of significant improvement in the wider economic picture. There is a risk that public spending cuts and higher taxes could choke off recovery. So, although we have become more optimistic, we remain cautious about market prospects."