Its forecast would see net mortgage lending fall by 18 per cent, from £104 billion to £85 billion in 2008, while transactions would reduce 17 per cent over the course of the year, from the current 1.40 million to 1.17 million. Hometrack also suggested house price growth would face a marked slowdown to 1 per cent in the coming year.
Hometrack said this significant downturn in business would result from slowing mortgage demand, stretched affordability levels and changes in the sector, as lenders took a flight to quality and restrict criteria. However, while arrears and repossessions were likely to rise, this would largely be contained within the adverse market.
Gary Styles, strategy, risk and economics director for Hometack, said: “The market is facing its most uncertain outlook for many years. It looks set to become more fragmented and the risks will become more concentrated in certain markets and sectors. Lenders need to look at the potential impact of more extreme events on their businesses.”
Styles added that the restricted market was likely to witness increasingly aggressive competition for the core, prime market.
Matthew Wyles, group executive director of Nationwide, said: “The big question is around how big gross lending will be. It’s very hard to judge, but you’ve got to remember that there will be a lot of Northern Rock business up for grabs. But it’s a bit early to be calling a slowing of the market.”
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