IMLA Paints A Positive Picture For 2008 Economy
The overwhelming mass of negative housing and mortgage market predictions for 2008, is worrying The Intermediary Mortgage Lenders Association (IMLA). They report that this 'doom and gloom' forecasting can spiral out of control weakening consumer confidence, and causing the recession to escalate.
IMLA's Executive Director Peter Williams explains:
"Demand for secured loans has remained buoyant, and indeed demand for buy-to-let and other (non-prime) loans actually exceeded expectations overall. This suggests that despite the uncertainty of the credit squeeze and the consistently negative tone of the media, British consumers are still confident enough to want to borrow, partly because they take a longer term view.
"Equally positively, we have seen the cost of 3 month LIBOR coming down partly reflecting the Bank interventions before Christmas. Although the volume of interbank lending at this price remains small, we should expect to see the market ease over the next few months. With the potential for further intervention by the Bank and a base rate cut we should begin to see the cost of borrowing stabilise and fall - which in turn will help the underlying demand for borrowing.
"While lenders do expect an easing of demand for loans next quarter - we don't see British consumers throwing themselves off Beachy Head. We could easily talk ourselves into recession, and we see no logical justification for that. What we are seeing is a correction from record levels of lending and the underlying fundamentals of this market remain very strong."
A Financial Times survey of 55 economists reported that only 13 see the UK housing market as a major risk to economic stability in 2008 and only 10 believe that house prices will drop more than 10%.
Published on January 25, 2008
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