It expects gross lending for this year to be around 21 per cent lower than last year at £285bn and net lending to be half last year’s level at £55bn. It also forecasts property transactions in England and Wales to be around 35 per cent lower than last year at 770,000 and predicts base rate to drop to 4.75 per cent by the end the year.
Gross lending hit £25.3bn last month, down 8 per cent from the same time last year but up 5 per cent from March. Although the CML puts this down to the fact we had an early Easter. For March and April combined, lending was down 16 per cent from 2007 levels.
Director general Michael Coogan says the CML’s forecasts account for the Bank of England’s liquidity injection.
He says: “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.”