CML forecasts healthy housing and mortgage market for 2016

The Council of Mortgage Lenders (CML) expects a benign domestic backdrop to help underpin gentle improvement in housing and mortgage market activity in 2016 and 2017.

In its latest forecasts for the two years ahead, the CML predicts gentle improvement in housing and mortgage market activity, although states that this will be limited due to affordability pressures and new supply challenges.

As for gross lending the CML anticipates that this will be supported by house purchase activity from home-owners and remortgage activity across the board.

While the government’s new housing initiatives may progressively increase, the CML believes that they will be slow to take effect through 2016 and 2017 and states that

“there is only limited upside potential for housing sales over the next two years, as a result of affordability pressures and new supply challenges.”

As previously reported, the CML’s Market Commentary highlights that buy to let faces a challenging time ahead due to changes in tax and potential macroprudential intervention from the Financial Policy Committee, both which will adversely impact the sector over the next two years.

The council believes that buy to let house purchase activity may peak in 2015 and then fall to below 2014 levels by 2017.

Turning to the potential rise in interest rates, the CML’s stance is slightly more hawkish than market predictions.

The CML sees the first rate rise coming in the second half of 2016 rather than at the beginning of 2017.

Despite this, the council expects limited deterioration in the underlying figures for arrears and possessions, stating that the majority of borrowers should cope with the moderate rise in interest rates.


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