Robust recovery for housing and mortgage markets

Projections produced by the Intermediary Mortgage Lenders Association (IMLA) suggest gross mortgage lending will reach £285bn this year. This revision, upgraded from a previous forecast of £283bn, points to the housing and mortgage markets’ continued strength in the face of pandemic-related challenges.

A strong housing market has caused a surge in mortgage lending. In the first five months of 2021, lending for house purchase was 87% higher than the same period in 2020 and 51% above the same period in 2019. Buy-to-let lending has also increased, propelled by house purchase transactions.

Peak buying

Housing turnover is expected to remain buoyant into Q3, with an additional 120,000 property transactions. However, after the high levels of market activity during the Stamp Duty holiday, the IMLA expects gross lending to dip in 2022, reducing its forecast from £286bn to £280bn.

Quieter spell to come?

While the Stamp Duty holiday has fuelled rising house prices, a slightly more subdued picture is likely to emerge following the end of the taper (30 September in England and Northern Ireland). This isn’t certain, however: in Scotland, where the Land and Buildings Transaction Tax reduction ended in March, buyer momentum has remained resilient and house prices have continued to rise at pace.

Kate Davies, Executive Director of the IMLA, commented, “With the Stamp Duty holiday soon coming to an end, and the Help to Buy scheme due to conclude in 2023, there is still a need for a coherent, long-term housing strategy from the government that embraces the public as well as the private sectors.”

More deals, lower rates

Separate figures1 show the number of mortgage deals has risen from 4,512 in July to 4,660 in August. At the same time, the average rate for two-year and five-year fixed rate products has fallen to 2.52% and 2.75% respectively.

The best deals aren’t lasting long though. If you’re looking to lock into a low rate, get in touch now and we can find the most suitable mortgage for your circumstances.

1Moneyfacts, 2021

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.