In U.K., Talk of ‘Sporadic and Shaky’ Recovery

Kevin Brass — Thu, 03 Sep 2009 16:07:52 +0000

As wishy-washy forecasts go, it doesn’t get much more wishy-washy than the Council of Mortgage Lenders prediction for activity in the U.K. Activity increased 26 percent from June to July, the highest level in nine months, according to the industry association’s latest report. But the CML wasn’t exactly popping corks. Lending activity in July was the lowest since 2001, down £11 billion from the July average of £27 billion (and nowhere near the £35 billion of 2007, the golden year of the frenzy).

“A further significant pick-up is unlikely with so many obstacles in place,” CML economist Paul Samter said in a statement. “As a result, we anticipate some seasonal slowing in lending volumes and housing transactions over the latter part of the year and the picture of a slow but more stable market to emerge.”

Not exactly words to whip up a market tornado. When Bank of England statistics released a few days later revealed a similar upward trend, CML’s Samter was quick to reiterate the council’s caution, noting the group sees “volatility” and down months ahead, “as the recovery is likely to be sporadic and shaky at first.”

The current move may be fueled primarily by high-end deals, Andrew Montlake of mortgage brokers Coreco told the Telegraph:

“This sector of the market tends to start moving first before slowly trickling down to the rest of the market as lenders are happier to lend to what they see as quality applicants with higher incomes and sizeable deposits.”

But he added: “There is still a big squeeze in terms of availability and competitive mortgage rates in the wider market despite buyer demand being strong.”

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In U.K., Talk of ‘Sporadic and Shaky’ Recovery