IMLA predicts the housing and mortgage recovery from Covid will remain robust

26 July 2021

  • The Intermediary Mortgage Lenders Association (IMLA) has today published its report on the impact of Covid on the UK housing and mortgage market—one year on.
  • This latest report notes the continued strength of the housing market, despite the challenges presented by the pandemic, and predicts that gross mortgage lending will reach £285 billion this year.

In January, IMLA’s New Normal report predicted a rise in gross mortgage lending to £283 billion in 2021, with a swift return to household spending as Covid-19 lockdown restrictions were eased. However, IMLA’s latest report has revised this figure, increasing it to £285 billion&msdash;the highest level of mortgage lending since 2007.

The predictions follow data which show a surge in mortgage lending, stimulated by the strength of the housing market. During the first five months of 2021, lending for house purchase was not only 87% above the same period the previous year, but 51% above the same period in 2019. And while remortgage activity has been weaker, the number of product transfers has risen to record levels. In light of the high levels of market activity brought forward by the Stamp Duty holiday, however, IMLA has also revised its forecast for gross lending in 2022, reducing it slightly from £286 billion to £280 billion.

The report, which makes a series of predictions about the market over the coming year, forecasts that house prices will be broadly flat in the second half of 2021 but will rise 1.6% in 2022. House prices have risen as a result of the Stamp Duty holiday, but the report predicts that a more subdued picture can be expected after the holiday fully ends in September.

Kate Davies, Executive Director of the Intermediary Mortgage Lenders Association comments:

“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.”

More insights from the report include:

  1. Housing transactions and house prices As a result of the extended stamp duty holiday, IMLA now expects housing turnover to remain buoyant in Q2 and Q3, with an additional 120,000 property transactions. However, IMLA has not changed its house price forecast, with prices expected to be flat in the second half of 2021.
  2. Arrears There was a modest increase in arrears of over three months, with an increase from their low in Q4 2019 of 0.72% of all loans to 0.85% in Q1 2021. There are now fewer than 30,000 borrowers on a mortgage deferral which suggests that arrears are unlikely to spike much further, particularly given the strong performance of the job market.
  3. Buy-to-let There has been an increase in buy-to-let lending which has been powered by house purchase transactions, mirroring the owner-occupied market. IMLA now expects 2021 to be the best year since 2016, with £13 billion of house purchase buy-to-let lending.

View IMLA's publications »

Dan Edwards, Rostrum
Tel: 07492 062 571

Notes to Editors

About IMLA

The Intermediary Mortgage Lenders Association (IMLA) is the trade association that represents mortgage lenders who lend to UK consumers and businesses via the broker channel. Its membership of 52 banks, building societies and specialist lenders include 18 of the 20 largest UK mortgage lenders (measured by gross lending) and account for about 90% of mortgage lending (91.6% of balances and 92.8% of gross lending).

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