The CML believes the year will end on 930,000 transactions compared to the 825,000 previously predicted, with £9 billion of net lending rather than the £8 billion predicted.
CML chief economist Bob Pannell said: “Whereas the Funding for Lending Scheme was conceived by the UK authorities to mitigate the worst impact of a potential fresh credit crunch its launch has in fact coincided with a more positive external funding environment in part due to European Central Bank actions.”
Pannell said the FLS now has the potential to underpin a modest pick-up in mortgage lending activity but the key test would be the extent to which greater borrower appetite materialised in response to better credit availability.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Record low interest rates have resulted in some of the cheapest mortgages ever seen so it is no surprise that lending volumes are slowly ticking up month by month and that the year has seen stronger lending volumes than initially forecast.
“But it is worth remembering that while rates may fall criteria are likely to remain tight so meeting these could still be an issue for many borrowers and will keep growth in the market in check next year.”
The CML said while activity levels remain far below the abnormal boom experienced before the financial crisis they do provide a springboard for cautious optimism for 2013.
The CML's central forecast is for 950,000 property transactions, £156 billion of gross lending and £12 billion of net lending in 2013 falling back a little in 2014 after the FLS drawdown window ends to 930,000, £150 billion and £11 billion respectively.
The CML is also pleased to observe that mortgage arrears have been lower than originally forecast for 2012, and the number of repossessions is likely to end the end year at 35,000, some 10,000 lower than forecast. The CML's central forecast is for 35,000 repossessions in 2013 and 37,000 in 2014.
