Housing and mortgage recovery to remain strong

6th October 2021

Despite challenges presented by the pandemic, the housing and mortgage market is expected to remain robust, with gross mortgage lending projected to reach £285bn this year. The revised figure from the Intermediary Mortgage Lenders Association (IMLA) has been uplifted from a previous forecast of £283bn.

The predictions follow a surge in mortgage lending, stimulated by the strength of the housing market. In the first five months of 2021, lending for house purchase was not only 87% above the same period the year earlier, but 51% above the same period in 2019. Buy-to-let lending has also increased, propelled by house purchase transactions.

A buoyant market

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

Uncertainty beyond Stamp Duty taper

While rising house prices have been driven by the Stamp Duty holiday, a slightly more subdued picture is likely following the end of the taper (30 September in England and Northern Ireland). In Scotland, where the Land and Buildings Transaction Tax reduction ended in March, data shows that buyer momentum has been resilient and house prices have risen 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.”

Mortgage rates continue to fall

Separate figures1 show the number of mortgage deals available has increased from 4,512 in July to 4,660 in August. Meanwhile, the average rates for two and five-year fixed rate deals have fallen over the last three months.

Deals aren’t lasting long, however, so if you’re looking to lock into a low rate, get in touch, 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.