We're losing sight

Nobody doubts the significant issues that lenders are dealing with in terms of liquidity.

Most are also happy to accept this is an issue that will last well into next year and keep a tight rein on the number of products available.

It will make it more difficult to provide mortgages for those at the extremities of the market and there will be those, unfortunately, who struggle.

However there are also going to be a large number of borrowers that do very well during 2008.

From Martin Ellis, chief economist at HBOS to the Council of Mortgage Lenders (CML), the general feeling is that there will be two cuts in the Base Rate during the year and these are likely to come sooner rather than later.

A lot has been made of the 2.8m borrowers that will be coming off fixed rates in the next 12 to 18 months and certainly those in the sub-prime and niche markets may have difficulties in matching their existing product.

The CML has forecast that gross mortgage lending will total £360bn in 2007 and drop back to £340bn next year. Other forecasts see the market being worth £300bn in 2008 and the truth of the matter is that we will simply have to wait and see.

However if we look back to 2000, the market was worth £119bn. If the market had grown by 10% each year it would have been worth around £231bn this year.

That gives some idea of the unheralded rise we have seen in lending volumes and that we now almost take lending of over £300bn a year for granted is frightening.

Fundamentally the housing market is in good shape. Base Rates are set to fall and once the credit markets loosen, mortgage providers want to lend.

Yes there are issues to deal with, but we must not lose perspective. 2008 may be more difficult than the years that immediately preceded it, but is arranging gross mortgages worth around £300bn really a bad year?

Sally Laker is managing director at Mortgage Intelligence

The views expressed in this article of those of its author and do not necessarily represent those of IFAonline or any other Incisive Media affiliated organisation.

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