As part of its forecast into the future of the market, the trade body said it expected house prices to rise by 1 per cent in 2008, while suggesting that mortgage arrears and repossessions would increase.
However, it expected the Bank of England Base Rate to decrease by the end of 2008 to 5 per cent, while suggesting that gross mortgage lending would reach £340 billion, down from £360 billion.
Michael Coogan, director-general at the CML, said: “The housing and mortgage markets are facing their most challenging period since Labour came to power a decade ago.
“We now expect a slower mortgage market next year, although by no means a stagnant one. Most borrowers will cope, but not everyone will escape unharmed from the effects of a slower market, so the government should make it a policy priority to overhaul the system of state support for home owners, which has lagged pitifully behind the times.”
David Dooks, BBA director of statistics, said: “Lower amounts of new mortgage lending and fewer loans approved for house purchase signal a weaker outlook for the mortgage market, particularly if loan supply reduces in the aftermath of the recent financial markets difficulties and borrowing costs remain at current levels.”
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