December’s gross lending was estimated at £11.7bn, which although sits a few percentage points below December 2011, is regarded by the CML as a return to “a stronger path”.
CML chief economist Bob Pannell said: "We are more positive about the UK housing market and wider economy than a year ago, despite economic headwinds and downside risks.”
In its market commentary, the CML described those “economic headwinds” as the expected contraction of GDP in the fourth quarter to be announced later this month and the drawn out rebalancing of the fiscal position and UK economy.
But the CML found many reasons to be positive in the form of a resilient labour market which has a current adult unemployment rate of 7.8% , down half a percentage on a year earlier.
And weaker inflationary pressures as the Consumer Price Index remained at 2.7% in December 2012 which was unchanged for the third month in a row.
But Pannell added a major reason for optimistic was due to better funding conditions which in part can be attributed to the Funding for Lending Scheme launched in August.
Yasin Patel, director of Mayfair Bridging, said: "The ambitions for FLS were high but the scheme's impact is finally being felt. Lenders are not just cutting rates but they are offering more products, even the high loan to value loans they had shunned for so long.”
But Patel said mortgage criteria remained as strict as ever.
David Brown, commercial director of LSL Property Services, added: “While December may have been a little disappointing after the recent steps forward taken by the mortgage market, 2012 as a whole was a year of steady improvement. To build on that progress in 2013 and match the CML’s optimistic forecast for the year lenders will need to do even more to unlock the demand from frustrated first-time buyers who haven’t yet felt the full benefits of FLS.
Ashley Brown, director of the independent mortgage broker Moneysprite, described the CML’s 2013 prediction as “bold” and said it would depend on a number of factors working in the market’s favour.
He said: “We need to see more activity at the higher loan to value level rather than the concentration of deals focused on borrowers with large deposits.
"If lenders start becoming more interested in first time buyers again, then the CML prediction may well not be fantasy-land.”
The CML has also drawn on the recent Bank of England credit conditions survey which revealed better mortgage credit availability and lower mortgage pricing in the fourth quarter of 2012.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Mortgage credit is now more easily available and the continuing product price drops mean that consumers have the luxury of choosing between some of the most appealing fixed rates we have seen since before the recession hit.
“It is especially promising to see this galvanizing borrowing across the market so that whether you are making a new purchase or remortgaging an existing property there are some particularly attractive options on the table.
“Our latest National Mortgage Index also suggests that applications for purchase mortgages were noticeably higher last month than they were in December 2011.
“With new products appearing we share the CML’s optimism that the appetite for mortgage borrowing is returning to something approaching good health.”
But Duncan Kreeger, chairman of peer-to-peer bridging lender West One Loans, added: “After lending just 39% of its pre-crunch peak, mainstream lending crawled over the finish line in 2012. The annual drop of 4.5% in December compared very unfavorably to the bridging sector which went in the opposite direction around ten times as fast.
“While the bridging market’s racing down the home straight like Mo Farah, the mortgage market looks more like Paula Radcliffe, limping along with injury trouble.
“2013 will be a similar story. Our survey of mortgage brokers shows they expect alternative finance to grow by 36% this year. But the high street lenders face even more fundamental problems than these figures suggest. They can’t get new funding without special government support. The CML’s members are jogging on the spot. Peer-to-peer lenders will continue to outpace the mainstream’s tired old model.”
