IMLA members, who account for over 80% of lending in the intermediary sector, anticipate that gross mortgage lending will total £150bn in 2013, with net lending of £9.3bn. Both predictions are slightly lower than the forecasts from the Council of Mortgage Lenders (CML) of £156bn gross lending and £12bn net lending, but still point to lender optimism about growth.
The IMLA predictions follow a strong end to last year for the UK mortgage market, with £11.7bn of gross lending during December bringing the total estimate for 2012 to £143bn, including net lending of £9bn. An estimated 930,000 residential property transactions were recorded in 2012 – the first time this has exceeded 900,000 since 2008, and significantly more than the CML prediction of 825,000.
Activity set to increase in line with lending
On average, IMLA members anticipate 940,000 residential transactions for 2013, though 40% felt the total will be higher and 20% predicted more than 1 million residential transactions over the next twelve months.
There is little expectation of significant movement in the average UK house price, which stood at £161,490 according to November’s Land Registry figures. IMLA members predict the average price in June 2013 will be around £164,000.
Mortgage market performance in 2012 and forecasts for 2013:
*CML estimates as at January 2013
In terms of market share, IMLA members expect first-time buyers to account for almost a quarter (23.9%) of total gross lending, with over a third (35.9%) going on remortgaging and just under a fifth (17.6%) comprising buy-to-lets.
High LTV lending predicted to rise
For 2013, IMLA members predict the greatest increase in high LTV lending will occur in the 85-89% bracket. Over half (58%) expect to see up to a 10% increase in the number of 85-89% LTV loans, while almost a quarter (21%) expect to see growth of up to 15%.
More than half of members (57%) also expect to see up to 5% growth at the 90-94% LTV level. However, almost all members (86%) say there will be no more lending at 100% LTV during 2013 than there was in 2012.
IMLA members pinpointed the journey towards implementing the final rules and guidance for the Mortgage Market Review (MMR) as the key issue facing the market in 2013, alongside individual broker registration and adapting to the new Financial Conduct Authority (FCA) regime. Settling the future of the buy-to-let market was also seen as very important.
Peter Williams, Executive Director of IMLA, said:
“It is encouraging to see our members taking a positive, yet pragmatic, outlook for 2013. There is a general consensus that we will see positive growth in the UK housing market, both in terms of mortgage lending and total residential transactions. Industry figures show that 2012 ended on a high note, and we have every reason to expect this to support further recovery in the market this year.
David Finlay, Chairman of IMLA, said:
“There are a number of key challenges in the year ahead, where IMLA will be active in representing our members’ interests and helping to guide the debate. With the MMR approaching in 2014, there is a real need for clear definitions on advising or arranging transactions, and both lenders and brokers will be keen to know how pipeline business will be dealt with when the changeover arrives.
“We are also committed to working with organisations such as the CML, the Association of Mortgage Intermediaries (AMI) and the Building Societies Association (BSA) to explore a solution to the issue of individual broker registration, to help to uphold standards of quality and professionalism as well as limit the potential for fraud. This innovation can be a force for good in improving perceptions about operating standards in the market, and also has the potential to drive an overall rise in performance and satisfaction for everyone concerned.”