The lender trade organisation said the strength of the London market, robust house price growth in other UK regions such as Northern Ireland, and a growing economy would support the upward trend.
This compares to the CML’s forecast of 2 per cent growth in 2006, which underestimated the market by around 8 per cent. The CML, in its 2006 predictions, also expected gross mortgage lending to fall to £275 billion. However the figure actually rose to £346 billion.
Bernard Clarke, communications manager for the CML, said:
“Since August 2006, we have had three quarter per cent rate rises and there might be more to come. If this is the case it will potentially dampen demand for housing among movers and first-time buyers. This could impact on the level of house sales and the extent of house price growth.”
Melanie Bien, associate director for Savills, added: “Bonuses will continue to fuel house price growth and lift the whole country. However, if interest rates keep going up, we won’t see such growth.”
