IMLA has found that intermediary lenders expect to see an easing of business volumes in the higher risk categories of lending, while lower risk mortgage business will continue to grow.
Self-certification business is expected to decline by around 2 per cent over the next quarter, while light, medium and heavy adverse volumes are predicted to ease by slightly smaller percentages.
Lenders believe that mainstream lending will continue to grow steadily over the next quarter, by 2.5 per cent. Buy-to-let is expected to surge by a strong 3.6 per cent.
IMLA executive director Peter Williams says: “In the current uncertain market lenders’ focus is expected to be more on mainstream and buy-to-let, but in reality and not least because underlying demand remains sound we are not seeing a meltdown of the self cert and adverse sectors. Lenders are re-pricing products and may indeed be pulling back slightly, but they still expect to write significant business volumes. Self cert and adverse accounts for around 40 per cent of our respondents’ business, and there is no sign that the proportion will fall to any significant degree.”
In the second half of 2007, 35 per cent of lenders predict that volumes will grow, and 40 per cent expect them to be broadly stable, but 25 per cent anticipate a slight fall of around 5 per cent.
On average, IMLA members expect gross mortgage volumes to grow by 2.0 per cent between H1 and H2. Looking forward to next year, forecasts are slightly more restrained, with average growth in volumes up 2.8 per cent for the full year 2008 compared with 2007. Again, 35 per cent expect volumes to grow, while 50 per cent expect stability and just 15 per cent anticipate a fall.
Williams adds: “IMLA members remain sanguine about the state of the market, with continued modest growth in lending volumes, but the 2.8 per cent increase they anticipate is modest compared with the growth between 2005 and 2006, which amounted to 12.5 per cent.”
“Clearly, competition remains fierce among lenders, particularly in an environment in which business volumes are slowing. It’s no surprise that in our survey 40 per cent of respondents cited competition and business volumes as key issues over the next 6 months.”