Outlook for Residential Mortgage Lending

September 30, 2010 by Admin

The recession brought reduced home buying activity and construction of new homes, resulting in slower growth of the mortgage market. Home-buying activity and housing construction are now slowing. Looking forward, demand for mortgages will be reduced compared to prior to the recession, but in historic terms will be strong.

Housing market activity has been very volatile during the past two years. At this time, it appears that we have reached the end of a sequence of temporary factors that distorted the housing market. It appears likely that activity during 2011 will be similar to very recent levels. These levels are strong enough to support stable housing values.

Consequently, the volume of residential mortgage credit outstanding is forecast to continue expanding, but at slower rates. Growth is forecast at about 7% during 2010, 6.5% in 2011, and close to 6% for 2012.

Mortgage approvals (which includes not just new mortgages but also transfers between lenders as well as refinances of existing mortgages) is forecast at $235 billion for 2010 (the second highest ever), followed by $203 billion for 2011 and $211 in 2012.