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Another warning from the Council of Mortgage Lenders

The mortgage trade body in the UK, the Council of Mortgage Lenders, has issued another stark warning over house prices falls, predicting that there will be around a 7% fall in house prices over the course of this year, with no hope of recovery for the mortgage lending sector over the year. In October the CML had predicted a 1% rise, but this prediction has been turned around completely over recent months, with house prices already having fallen compared to this time last year.

This latest prediction is said to be one of the bleakest yet from a body involved in housing and mortgages. Officials from the CML have also said that by the end of the year house price falls may be even greater, and the number of houses being sold will fall by around 35% to 770,000 sales, which is the lowest level since the 1970s.

The CML further claimed that mortgage lending levels for both new properties and remortgages fell by 16% for March and April compared to the same period last year. In fact, net lending for this year is expected to fall by around £55 billion, with the CML stating: “Lending volumes will get worse before they get better.” The housing and mortgage slump is expected to continue into 2009 according to the CML.

There are also concerns that the downturn in housing sales, partly fuelled by tighter lending conditions, could affect thousands of jobs, from workers in furniture and carpet retailers to carpenters, builders, and also estate agency staff. The buy to let mortgage has also been affected by this downturn, with buy to let loans for the first quarter of this year falling by 22% compared to last year.