Lenders have positive outlook for 2008
Despite the chaos that the credit crunch has already caused in the UK and other parts of the world, and despite the likelihood of the effects of this turmoil continuing well into next year, the Intermediary Mortgage Lenders Association has stated that the result of a survey show that its members are remaining positive with regards to the outlook for the forthcoming year.
According to the results of the survey carried out by the IMLA member firms were positive about the coming year because of other factors that are underpinning the market such as housing demand and healthy employment figures. Over two thirds of members also said that they felt remortgaging levels would either remain unchanged or would rise.
The survey also showed that around 60% of lenders have tightened up on assessment criteria when it comes to making loans, and around 80% have lowered the LTVs.
One official from the IMLA stated: "Lenders have a realistic but optimistic perspective on the market, which will be supported by good levels of remortgaging activity and a reaffirmation of prudent lending practices. They are noticeably more upbeat about their own firm’s volumes than they are about the market as a whole, pointing to the considerable opportunities that remain within such a large market. With credit quality moving up the agenda and key to the reopening of the structured finance markets, lenders are tightening their lending criteria with regard to both LTV ratios and financial assessment."
He also stated: "We believe the Bank of England has further potential to reduce borrowing costs and increase confidence. While Mr King and his colleagues must walk the tightrope between the risk of a slowing economy and the threat of rising inflationary pressures, we think the MPC can and should cut rates again, possibly as early as in January. This would clearly help boost market sentiment in 2008, which lenders believe is a key factor for the return of normality to the markets."
2nd January 2008