Gross mortgage lending to recover in 2020 and 2021: IMLA

IMLA expects lending to grow by 1.4% to £268bn in 2020, rising to £275bn in 2021.

Rozi Jones
15th January 2020
growth tree rings
"Our report shows that a boost in consumer confidence is likely to support modest growth over the next two years."

The mortgage market is set to return to growth over the next two years, according to the Intermediary Mortgage Lenders Association (IMLA).

Its figures show that gross mortgage lending fell by between 1-2% in 2019 but it expects lending to grow by 1.4% to £268bn in 2020, rising to £275bn in 2021, driven primarily by purchase lending.

IMLA says the market will be supported by earnings growth, the low rate environment, and a reduction in political uncertainty following the General Election.

The Association also expects intermediaries to grow their market share further in 2020 to 77%.

However IMLA also noted that market growth over the coming years will rely on Britain’s ability to negotiate a trade deal with the EU

Additionally, although the main driver of growth in the market until 2018, remortgaging is expected to remain flat over the next two years at £100bn as more borrowers turn to product transfers and higher volumes of five-year fixed rate mortgages "reduce the amount of market churn".

Product transfer volumes grew by 13.3% between Q1 2018 and Q3 2019 and the report forecasts that this area of the market will grow again by 4% in 2020 to £172bn and a further 2% in 2021 to £176bn.

IMLA’s report also predicts that the buy-to-let market will continue to fall to £40bn in 2020 and £39bn in 2021 as tax relief for landlords is fully removed in April this year.

The planned restriction of Help to Buy could also limit the ability of some buyers to press ahead with their housing plans unless alternative schemes become available.

Kate Davies, executive director of IMLA, said: “The next two years certainly look positive for the mortgage market. In 2019 the sector remained resilient in the face of ongoing political uncertainty, but our report shows that a boost in consumer confidence is likely to support modest growth over the next two years.

“Intermediaries are driving a large part of that growth as borrowers continue to seek out the expertise of advisers to help them find a mortgage.

“Although we expect modest growth for the mortgage market over the next two years, Britain’s housing market is still far from perfect. The buy-to-let sector continues to be under pressure from a spate of tax and regulatory measures enacted over the last five years and IMLA continues to call for a moratorium on any further changes to the Private Rented Sector.

“The planned restriction and eventual closure of Help to Buy also requires the industry to consider new ideas. More than 200,000 housing transactions have been supported by Help to Buy equity loans since their launch and without suitable alternatives first-time buyers will have fewer alternatives. IMLA believes that the new government should encourage the industry to embrace innovative solutions that could replace Help to Buy, bringing together lenders, housebuilders and the regulator to identify what could take the place of the scheme.”

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