Martin Lewis provides advice on mortgages in later life
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According to forecasts conducted by the Intermediary Mortgage Lenders Association’s (IMLA) ‘New Normal’ in January, an increase in gross mortgage lending to £283billion was predicted for 2021.
However, the trade association has now revised this figure to £285billion, making it the highest level of mortgage lending in the country since 2007.
This is a stark rise from the £243billion in mortgage lending from last year, as well as the £268billion in 2019.
Furthermore, IMLA updated its forecast for gross lending in 2022, decreasing it slightly from £286billion to £280billion.
The trade organisation is predicting this reduction as it is taking into consideration the number of transactions that have been brought forward due to the stamp duty holiday.
Once the stamp duty holiday ends in September, the body predicts house prices will plateau across the country.
IMLA’s data reveals that this increase in mortgage lending has resulted from the overall strength of the UK’s housing market.
Within the first five months of 2021, house purchase was 87 percent above the same period last year.
Surprisingly, in another sign of growth in the market, this figure was 51 percent higher than the same period in 2019.
Despite remortgage activity being weaker generally, the number of product transfers have also increased in the past year.
Furthermore, IMLA says that house prices will be broadly flat in the second half of 2021, yet does see a rise of 1.6 percent in 2022.
Housing turnover is predicted to “remain buoyant” in the second and third quarters of 2021, with a further 120,000 property transactions.
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Buy-to-let lending has also increased over the past five months, primarily due to house purchase transactions.
2021 is expected to be the best year since 2016 for buy-to-let, with £13billion of house purchase buy-to-let lending.
Kate Davies, the IMLA’s Executive Director, noted that this forecast shows yet another positive outlook for the UK’s mortgage and housing market.
Ms Davies 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, she also emphasised that the Government needs to provide a roadmap for housing in the UK ahead of certain measures coming to an end.
Ms Davies explained: “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.”
Rob Thomas, IMLA’s Principle Researcher and the new report’s author, highlighted how digitalisation has helped lenders reach out consumers with mortgage offerings.
Mr Thomas said: “The digital transformation of lenders is also likely to accelerate as a consequence of the hybrid office/home working model and lower use of physical branches now that more customers have become accustomed to remote banking.
“There is a positive aspect to these changes as they reduce costs, which is likely to be passed on to customers.”
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