The Council of Mortgage Lenders has increased its gross mortgage lending forecast for 2011 from £135bn to £140bn. It is also predicting gross mortgage lending of £150bn in 2012.
It says that it seems probable that the Bank of England base rate will not rise this year and that it will remain unchanged at this current level of 0.5% for most of 2011 - before modest progressive tightening that continues through 2012.
In its News & Views section, it says: “Housing transactions have, of course, fallen sharply since the credit crunch, averaging less than 900,000 annually over the past three years. Cash-financed sales have been more resilient over this period and have therefore increased as a proportion to about a third of property sales.
“Assuming that this continues to be the case, overall activity is likely to be at broadly similar levels this year and next.”
The bank of England base rate has been held at the same mark since March 2009 and economists are not predicting a change this year.
Andrew Goodwin, senior economic advisor to the Ernst & Young Item Club forecasting group, told Times Online that: “There are some major question marks emerging over the state of the recovery. It is difficult to see the MPC feeling certain enough about future prospects to contemplate a rise in rates any time soon.”
June 3, 2011