Recovery in the housing market is set to slow this year, according to the Association of Mortgage Intermediaries.
The prediction is made in AMI’s first quarterly economic bulletin of 2010, which sets out its view of the economy, including the mortgage and housing markets.
The report states:
* That gross mortgage lending will be between £150-160billion for 2010;
* There will be 620,000 housing transactions in 2010;
* Sharp inflation rises in December 2009 will subside as 2010 progresses;
* That the recovery is underway, but further quarters of GDP contraction may yet happen.
AMI Director Robert Sinclair said: "Although the recovery is now underway, the mortgage market will continue to face significant challenges in 2010. The shortage of housing supply for sale and the continued low level of mortgage funding will continue to constrain the level of activity in the market.
"The rush of completions towards the end of last year, due to the stamp duty holiday, distorted figures for transactions. With the average UK home comfortably below the £175,000 stamp duty threshold, buyers would have pushed hard to avoid an additional levy of £1750 on completions after December. As a result, we are likely to see a drop in completions in the first quarter of 2010. Rather than tinkering with stamp duty levels what we need to see is a root and branch reform of this inequitable 'slab' tax on property.
"Remortgage levels remained low in 2009 but will rise if interest rates are put up and borrowers move to fixed-rate deals. If this happens lenders will switch away from new lending, which could again depress the recovery.
"If we are to see a real improvement in the mortgage market throughout 2010, the Government needs to work harder to get lenders lending again. And the banks in particular need to ensure that the intermediary sector continues to be supported, in order to provide customers with the full range of options available to them."
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