The fastest growth in mortgage lending is predicted to be in 2017, with a forecasted rate of 11.7%, largely due to the Office for Budget Responsibility predicting the year will see the largest growth in UK house prices over the period.
Timetric expect gross lending to total £218.6 billion in 2015, before rising to £241.6 billion in 2016 and reaching £286.8 billion in 2019.
On the other hand, mortgage outstanding balances are expected to grow at a slower pace. Repayments are likely to increase as stronger economic growth prompts a rise in the official Bank of England policy rate and a subsequent increase in banks’ mortgage interest rates. Balances outstanding are forecast to reach £1.33 trillion by the end of 2015 to reach £1.39 trillion by 2019.
Ben Carey-Evans, Analyst at Timetric, said:
“Rising interest rates, combined with reduced growth in the UK housing market, is set to stunt increases somewhat from the 15% and 22% rates seen in 2014 and 2013 respectively. Improving economic conditions, however, particularly the continuation of improving real wages - due to extremely low inflation - should see gross lending rising at a steady rate up to 2019.
“Growth in the mortgage market will be supported by rising house prices necessitating larger-value loans, and regional variations in house prices will continue to influence the distribution of mortgage lending."
