Analysts have described the UK mortgage market as being in “recovery mode” and have said it is on track for booming growth.
The market will increase by 13 per cent, with Britons on course to take on £324 billion in mortgages – but not until 2010.
In the short term, the latest Datamonitor report predicts flat or marginal growth over the next two years, with growth beginning to accelerate through 2008.
“Not only will mortgage lenders have to cope with a slow market for another two years, they will also have to contend with the threat of increasing bad debts and costly regulation,” said analyst Maya Imberg.
While mortgages have undergone a limited boom, with homeowners remortgaging to take advantage of the best mortgage rate deals, arrears and repossessions will continue to have an effect.
“Bad debt has always been a concern for lenders,” said Ms Imberg.
“But in the current economic climate, such a concern has become all the more important. The worry is that should consumers start to buckle under the weight of their debts, bad debts could rise, hurting lenders’ overall profitability.”
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