The trade association now expects the mortgage lending to hold steady at £248bn next year rather than the £261bn predicted in December 2015.
The Council of Mortgage Lenders has revised down its lending forecast for 2017 in part due to the economic uncertainty of the UK plotting its exit from the European Union.
The trade association now expects the mortgage lending to hold steady at £248bn next year rather than the £261bn predicted in December 2015. The CML also forecast lending to reach £252bn in 2018.
Paul Smee (pictured), CML director general, said: “Overall, the mortgage market remains resilient but is likely to plateau rather than grow much for the next couple of years.
“Gross lending is likely to hover around the £250bn mark in 2016, 2017 and 2018. Property transactions look set to drift down slightly, although we do not expect house prices to fall, and net lending seems unlikely to get above £30bn next year.
“The housing market is relatively well insulated from direct Brexit effects as most activity is driven domestically, but it is not immune from more generalised economic uncertainty.
“And we expect any modest strengthening in home-owner lending to be rather offset by a less active house purchase market in buy-to-let, as both tax and regulatory changes bite on landlords.”
The CML said it doesn’t expect house prices to fall in the next two years.
It expects the lack of new housing supply to continue, adding that new build starts will only increase modestly.
The association said 2015 will be held as a “high watermark” for purchase activity, which will be weaker from this year to 2018 to the stamp duty and regulatory changes.
It also predicts more arrears and repossession in 2017 and 2018 due to harsher economic conditions.
Jonathan Harris, director of mortgage broker Anderson Harris, said: “It is no surprise that the CML has revised its forecast for the mortgage market downwards for next year.
“2016 has been a tricky year with challenges presented by high stamp duty costs and the referendum outcome, and uncertainty will continue into next year, coupled with the impending changes to mortgage interest tax relief for landlords which will have a negative impact on buy-to-let.”
He added: “It is hard to see any movement in interest rates and mortgage rates are likely to be fairly settled as well.
“We do not expect them to rise significantly next year - while economic news will impact Swap rate movements from time to time pushing up the cost of borrowing, overall we expect the mortgage market to tick along much as it has.”
