A new report has been published by the Intermediary Mortgage Lenders Association (IMLA) detailing the impact of Covid on the UK housing and mortgage market, one year on. It notes the continued resilience of the market despite the challenges faced during the pandemic and predicts that, by the end of the year, gross mortgage lending will reach £285 billion - the highest level of mortgage lending since 2007.
The New Normal report - released by the IMLA in January - originally suggested that gross mortgage lending would rise to £283 billion, with a swift return to household spending as Covid-19 lockdown restrictions were eased - but this forecast has now been revised and increased by a further £2 billion.
The predictions are driven by data showing a mortgage lending surge amid a period of stimulation for the housing market. Indeed, the first five months of 2021 saw lending for house purchases rise by 87% against the same period a year earlier and by 51% against the same period in 2019. In addition, the number of mortgage product transfers has risen to record levels despite remortgage activity being weaker.
The IMLA has now also revised its forecast for gross lending in 2022, reducing it from £286 billion to £280 billion in light of the high levels of mortgage activity resulting from the stamp duty holiday.
The report makes a series of predictions about how the market will perform over the coming year, including that house price growth will flatten during the latter half of 2021 before rising by 1.6% in 2022. It predicts that, despite prices having risen as a result of the stamp duty holiday, a more subdued short-term future can be expected once it fully ends in September.
Kate Davies, executive director of IMLA, said: “Following a difficult period in the wake of the coronavirus crisis, it is very encouraging to see yet another positive prediction for the remainder of 2021. Our findings forecast that 2021 will see the highest level of mortgage lending since 2007 and, with a combination of government support helping to underpin new purchases and a bumper year for product maturities, we expect this high demand to continue. However, 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 – and delivers a market that meets Britain’s housing needs for the decades to come.”