Slow Recovery Expected For Homeowner Loan Market
Although there were some positive signs of improvement in the housing and home owner loan markets towards the end of last year, on the whole it was a particularly bad year for anyone associated with the industry and despite the fact that the UK is now officially out of recession (albeit with only 0.1 per cent growth), many experts are still rather gloomy about the outlook for the coming year, particularly in the loan and housing markets.
One such trade body, the Association of Mortgage Intermediaries (AMI) has said it expects a long and slow recovery and has published its predictions for the coming year.
The AMI has predicted that new lending on home owner loans over the course of 2010 will be between £150 and £160 billion for the year and will consist of around 620,000 individual housing transactions. They also expect that inflation will fall from the high level seen in December last year, to a more reasonable figure, reducing the likelihood of interest rate rises on loans and although recovery is now happening, we could still experience some quarters of negative growth throughout the year.
Robert Sinclair of the AMI said “Although the recovery is now underway, the mortgage market will continue to face significant challenges in 2010. The shortage of housing supply for sale and the continued low level of mortgage funding will continue to constrain the level of activity in the market. Remortgage levels remained low in 2009 but will rise if interest rates are put up and borrowers move to fixed rate deals.
If this happens lenders will switch away from new lending, which could again depress the recovery. If we are to see a real improvement in the mortgage market throughout 2010, the government needs to work harder to get lenders lending again. and the banks in particular need to ensure that the intermediary sector continues to be supported, in order to provide customers with the full range of options available to them.”
