November’s lending volumes are likely to be lower than what was an incredibly busy October but are still well up on the same period last year, pointing to a sustained recovery in the market, according to the latest figures from the Council of Mortgage Lenders (CML).
While some other indices are pointing to aggressive growth in the housing market over coming months, the CML forecasts a gentle improvement in activity. This is more realistic and is likely to be more sustainable. Fundamentals remain strong, such as low inflation, rising wages, more jobs and competitive mortgages, which will support the market.
However, borrowers are likely to become increasingly concerned about rate rises, particularly with the Fed finally taking the plunge and increasing rates. This will focus the minds of those who may have been delaying remortgaging and we expect more people to opt for a fixed rate in the first half of the year.
The biggest challenge for borrowers is meeting lenders’ affordability criteria, as property prices continue to rise in many areas while wages fail to keep up. First-time buyers will find it difficult to get themselves in a position to buy unless they have assistance from the Bank of Mum and Dad. This should keep a lid on the market and ensure we don’t return to runaway growth.