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AMI: Quantitative easing is the only way forward

Robert Sinclair, Director of AMI, said:

"With the Government committed to fiscal consolidation to protect sterling and our ability to finance our debt, more QE is the only way forward, as the more usual economic levers of tax cuts or public spending increases are not available.

"Provided there are no unexpected global economic shocks, gross mortgage lending is liable to emulate 2010 and 2011. Whilst the sum of lenders sales targets comfortably exceeds those for the past two years, pressure on balance sheets and limited remortgage opportunities will restrain volumes.

"There has been a slight increase in higher loan to value lending, which matches the decline in possession and arrears levels. This is off the back of low base interest rates that show little likelihood of increasing during 2012.

"Following the recent Halifax work on the affordability of purchase versus renting, we have looked at the longer term impacts. Due to the impact of inflation on rent and the on-going cost of rent after a mortgage would be repaid, it is significantly cheaper to buy than rent over a 50 year term. This is irrespective of the fact that the buyer would end up with an asset that would have a significant value. Whilst there is a need to lend and borrow responsibly, it does make economic sense for most people to buy rather than rent."

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