CML warns of downside risk on lending forecasts

Responding to the Bank of England lending data published today, the CML's director general Michael Coogan commented:

"Now that we have seen mortgage approvals data for the first four months of this year, it is becoming clearer that the risks associated with our lending forecast for 2010 are on the downside. We are predicting gross lending of £150 billion this year - and net lending of £15 billion - but are keeping our forecasts under review as we are tracking below these levels to date. 

"So far this year, house purchase activity has been lower than in the last half of 2009, although this reflects the stamp duty holiday, which boosted activity towards the end of last year and caused the quiet start to 2010. Meanwhile, although lower interest rates are benefitting borrowers, they are removing the incentive to remortgage, which is also bearing down on the lending figures.

"The data is likely to reflect both the continuing shortage of mortgage funding and weak consumer confidence, and therefore demand. The forthcoming Budget represents an opportunity for the government to prioritise support for home-owners, although we recognise the fiscal position leaves only limited room for manoeuvre. We will update our forecasts later in the summer."