The report suggests that:
- Gross lending for the year may fall slightly below the CML's target of £140bn
- Significant risk remains on balance sheets as over a third of Lloyds', Santander and RBS' lending is at high or very high LTV
- House prices continue to fall in most parts of the UK outside of London
- Renting is more expensive than buying in eight out of ten British cities, with the gap as much as 30% in cities as diverse as York, Birmingham and Milton Keynes
Robert Sinclair, Director of AMI, said:
"The squeeze on household incomes is depressing demand despite the fact it is now clearly cheaper to buy than rent in most parts of the UK.
"With interest rate rises off the agenda for some time, borrowers have little to fear in the short term from rising mortgage costs.
"Each quarter, we push back later and later our expectations for rate rises. Swap rates suggest February 2012 is when the Bank will increase them, but we think it could be even later than that now.
"Figures from the Bank of England's Financial Stability Review also show there are still significant risks on bank balance sheets, with some demonstrating substantial exposure to high and very high LTV secured debt.
"Dealing with this level of exposure will make it more difficult for them to expand their balance sheets and comes at a time when they are under political pressure to lend more.
"However, despite the obvious difficulties, we've now had three years of dealing with a fragile market. While there are likely to be bumps in the road ahead, we should be encouraged that a level of stability has crept back into the market."
