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The mortgage market should continue to grow next year with a 15% rise in gross lending to £195 billion.

That compares to an estimated £170 billion this year

The growth should continue into 2015, when total gross mortgage lending should hit £206 billion, according to new CML market forecasts published today.

Net advances are likely to rise from £10 billion this year to £15 billion next year and £20 billion in 2015.

But Help to Buy should have only a minimal impact and the CML said "an unbridled housing boom" is unlikely.

The CML is less concerned about a housing bubble than economists who recently called on the government to scrap stimulus to prevent a bubble.

It said housing market activity may even ease back of its own accord, "given the already stretched nature of household finances, the new regulatory environment and the likely future course of interest rates."

The number of mortgages 2.5% or more in arrears is likely to stay stable next year at around 150,000, and rise only modestly in 2015 to 160,000.

Repossessions should fall from around 30,000 this year to 28,000 next year, before returning to 30,000 in 2015.

The CML said the benign period of falling arrears and possessions may be coming to an end, although most households will cope with the transition to more normal interest rates.

The volume of business written under the new Help to Buy mortgage guarantee scheme may be relatively modest, it said, with a smaller but more positive market impact than many commentators suggest. 

CML chief economist Bob Pannell said: "Gross mortgage lending climbs above £190 billion next year, its highest level since 2008. While this is largely on the back of the continuing revival in housing market activity, we also expect to see a meaningful turn-round in remortgage activity.

"Despite a strong pick-up in gross mortgage lending, we have pencilled in relatively modest net lending figures of £15 billion in 2014 and £20 billion in 2015.

"This reflects, among other things, our view that some households will use the relatively benign economic conditions to prioritise debt repayments, ahead of medium-term interest rate rises.

"We think there are good grounds to be optimistic that the vast majority of households will cope with a slow but certain transition to more normal interest rates.

"This seems to be the game plan which the Bank of England has in mind, but presumes (as we do) that the UK avoids a destabilising housing boom over the next few years."

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