Mortgage market in the UK expected to have strongest post-recession year

Mortgage market in the UK expected to have strongest post-recession year [Photo: PRImageFactory via iStock]

The UK's mortgage market is expected to experience its strongest post-recession year in 2017, according to the latest data, which suggests there has been a real rise in affordability of loans in the last few years. 

In a new report released this week by the Intermediary Mortgage Lenders Association (IMLA), it was revealed that by the end of this year, gross mortgage lending should hit some £260 billion. When compared to 2016, this represents a very sizeable increase, with mortgage lending totals up by 5.9 per cent from the £245 billion recorded 12 months ago. 

This change is being led by a surge in the number of people nationwide who are choosing to remortgage their home. At the same time, there is forecast to be a slight fall in the volume and value of buy-to-let mortgages witnessed across the UK, before this rises again in 2018. 

The IMLA said that in the coming months, net mortgage lending should also come in at some £45 billion. This is, surprisingly, the highest net mortgage lending recorded since 2007, when the market was at its highest point, as well as being the strongest year since the recession damaged the market in 2008, marking significant progress since then. 

In total, this means that the amount of mortgage debt for the UK as a whole has risen by 3.4 per cent in the past year. This is only slightly faster than the Office for Budget Responsibility says disposable income has climbed in the same timeframe. 

"The mortgage market shook off uncertainty and turbulence to register another solid year in 2016, and the IMLA predicts that the market is set to do the same again in 2017. There are many factors that have contributed to the continued strength of the mortgage market and are likely to support its growth over the rest the year," said Peter Williams, IMLA’s executive director.

The main strength of the market in 2017 remains the fact that there is an increasingly diverse group of buyers around at present. The IMLA expects that in the next few months, buy-to-let will continue to struggle to keep pace with what it has done in the past, which is likely to mean it seeing a six per cent contraction, but this is being accounted for by a rise in the number of people looking for remortgaging and house purchasing options. 

"The market has been supported by high levels of public demand for housing from a variety of different customer profiles. Furthermore, low mortgage rates and relatively modest levels of inflation have instilled borrowers with confidence, and made them willing to take out loans for purchase," said Mr Williams. 

"Different segments of the mortgage market had contrasting years in 2016. The remortage market performed very well, with existing borrowers eager to take advantage of rising house prices and low rates by securing a new deal. However, with lenders increasingly encouraging product transfers, it will be interesting to see if the remortgage market maintains this momentum in the long term," he added.