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Property market optimism from the CML

The Council of Mortgage Lenders (CML) says that there are grounds for optimism that the property market recovery which began in 2012 should continue this year, reinforced in part by Funding for Lending scheme (FLS) effects.

This time last year, the CML had forecast that 2012 would see 825,000 property transactions, £133 billion of gross lending, and £8 billion of net lending. In fact, activity was stronger than it expected, and the organisation now expects to end 2012 at 930,000 transactions, £144 billion of gross lending and £9 billion of net lending.

While these activity levels remain far below the abnormal boom experienced before the financial crisis, they do provide a springboard for cautious optimism for 2013, says the CML.

It predicts 950,000 property transactions, £156 billion of gross lending, and £12 billion of net lending in 2013, falling back a little in 2014 after the FLS drawdown window ends to 930,000, £150 billion and £11 billion respectively.

“Whereas the FLS was conceived by the UK authorities to mitigate the worst impacts of a potential fresh credit crunch, its launch has in fact coincided with a more positive external funding environment, in part due to European Central Bank actions,” said CML chief economist Bob Pannell. “Given this more benign context, in our view the FLS now has the potential to underpin a modest pick-up in mortgage lending activity… A key test, however, will be the extent to which greater borrower appetite materialises in response to better credit availability.”