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CML downgrades 2012 lending forecast by £17bn

The Council of Mortgage Lenders has downgraded its gross lending forecast for 2012 from £150bn to £133bn.

The trade body says the 2012 forecast has been reduced because of the weak economic activity that now seems likely. The 2011 gross lending estimate has been reduced slightly from £140bn to £138bn.

It also expects new lending to total £9bn in 2011 and £5bn in 2012.

The CML has also forecast a fall in the total number of transactions next year, falling from an estimated 852,000 in 2011 to 825,000 next year.

It says the numbers of repossessions are set to rise next year to 45,000, up from an estimated 37,000 this year.

CML chief economist Bob Pannell says: “The weak state of the wider economy and household finances creates a challenging and highly uncertain backdrop for the housing and mortgage markets.

“Despite the fact that activity levels have already been subdued for several years, we have pencilled in a broadly flat picture – for both mortgage lending and property transactions – at least until real incomes show signs of stabilising as inflationary pressures recede.”

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