Mortgage lending to remain flat in 2011

By Nia Williams

04 Feb 2011

The Bulletin predicts similar levels of housing transactions and lending levels for 2011 as 2010. It also identifies that despite higher loan to value mortgages being offered, the proportion of borrowers who were first-time buyers fell in 2010.

In addition the report suggests that:

Restricted supply and strong tenant demand will improve buy-to-let finance and keep rents rising
Remortgage figures will continue to rise
Regional house price disparities will intensify as public spending cuts will hit the north hardest

Comenting, Robert Sinclair, director of AMI, said: "We expect the Q4 GDP figures to be revised upwards in coming weeks but inflation will continue to increase pressure for a rise in interest rates. However, the Monetary Policy Committee will continue to balance the competing risks of driving the economy backwards against the need to minimise the damaging impacts of inflation.

"Broadly we expect housing transactions, house prices and lending levels to match last year. 2011 could be a carbon copy of 2010. However the second half of the year still has potential for an upside if government decides it needs to encourage more support for first time buyers.

"The bright spots will be the buy-to-let sector and a pick up in remortgaging, for those who can meet lenders’ strict criteria and fear the risks of rate rises.”