The report contains a wealth of key UK economic data and provides an overview of current market trends. Net lending will continue to decline with gross lending expected to be just over £145bn in 2009. AMI is also predicting that mortgage intermediaries risk finding their share of the market squeezed.
Robert Sinclair, Director, AMI, said: “Our latest Quarterly Economic Bulletin sets out a gloomy picture for the UK Housing and Mortgage markets in 2009. The bulk of Government initiatives are still in the planning and implementation phases, indeed much of the re-capitalisation money for our Banks is still to fully impact on their finances.
“Intermediaries do risk finding their share of the market squeezed in 2009. If big lenders’ choose to favour their branch networks, the intermediary share could be less than half of the £145bn that is available to be lent. During this period, the long term need to put consumer interests first (and value their desire to consult an intermediary) must be respected by lenders. Alternatively, lenders risk inflicting a mortal blow on distribution. Sub-prime, self-cert, buy-to-let and lending on new-build homes are all traditional intermediary product areas and these are all going to be very weak. 2009 is going to be a lean year.
“One beneficiary within the housing market will be those on the lowest rungs of the ladder. With the price differences between one and two bedroom houses falling, trading up will be an increasingly realistic prospect for many in 2009. However, with unemployment growing, an increasing Government deficit and an escalating fiscal trap, we are still in for tough times.
“The wide range of new initiatives will certainly help, but with banks still vulnerable, it is very unclear how effective the new measures to boost lending will be and how quickly they will make their impact.
“Recent Government announcements need to be given compelling priority and their implementation accelerated if we are not to see the situation worsen before it gets any better. Consumers value and trust the advice given by intermediaries on their mortgages. The Banks need to ensure that they continue to fund and promote this sector as much as their own branch networks, which can only provide consumers with part of the picture.”
