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| CML predicts 7% house price fall | CML predicts 7% house price fall |
| (30 minutes later) | |
| The Council of Mortgage Lenders (CML) has predicted a 7% drop in UK house prices during 2008. | |
| The CML expects there to be 35% fewer property transactions in England and Wales this year than in 2007. | |
| The government's own advisers last week suggested that house prices would fall 5-10% in a briefing paper to Cabinet. | |
| The CML's updated housing market forecast came as UK gross mortgage lending hit £25.3bn in April, a 5% rise from March but an 8% annual decline. | The CML's updated housing market forecast came as UK gross mortgage lending hit £25.3bn in April, a 5% rise from March but an 8% annual decline. |
| The lenders' group also predicts that net mortgage lending will be £55bn in 2008, half of what it was in 2007 and down from its previous forecast of £90bn. | |
| At the end of 2007, the CML predicted that house prices would rise by 1% in 2008, but the effects of the credit crunch on the availability of mortgages has led to the revised prediction of a 7% fall. | |
| "In the wake of the credit crunch, 2008 will be remembered as a very weak year in the housing market," said CML director general Michael Coogan. | "In the wake of the credit crunch, 2008 will be remembered as a very weak year in the housing market," said CML director general Michael Coogan. |
| 'Crumbs of comfort' | 'Crumbs of comfort' |
| A fall in prices would be welcomed by some who have seen a decade of price rises rule them out of the market. | |
| In the wake of the credit crunch, 2008 will be remembered as a very weak year in the housing market Michael Coogan, CML director general | |
| The Royal Institution of Chartered Surveyors revised its 2008 predictions from prices remaining unchanged to a 5% fall over the year. | The Royal Institution of Chartered Surveyors revised its 2008 predictions from prices remaining unchanged to a 5% fall over the year. |
| And on 13 May Housing Minister Caroline Flint was photographed carrying a briefing note into a Cabinet meeting which suggested a 5-10% fall, and a note saying "We can't know how bad it will get". | And on 13 May Housing Minister Caroline Flint was photographed carrying a briefing note into a Cabinet meeting which suggested a 5-10% fall, and a note saying "We can't know how bad it will get". |
| But the CML suggests there are "crumbs of comfort" as it has not changed its previous view on repossessions in 2008 - which remains at a predicted 45,000, up from 27,100 in 2007. | But the CML suggests there are "crumbs of comfort" as it has not changed its previous view on repossessions in 2008 - which remains at a predicted 45,000, up from 27,100 in 2007. |
| 'Payment shock' | |
| Jim Cunningham, senior economist at the CML, said that borrowers coming off fixed-rate deals were "managing the adjustment well". | |
| He said the Bank of England's plan to help ease the credit crisis by allowing banks to swap mortgage debts for government bonds would have an effect on the mortgage market later in the year. | |
| "The intensity of payment shock for those coming off fixed rates over the remainder of this year will moderate," he said. | |
| The lenders' group forecasts that interest rates should also end the year at 4.75%, down from their current level of 5%. |