You could be forgiven for thinking that the future isn’t too bright for the mortgage industry due to the uncertainty and negative “noise” surrounding Brexit. However, a recent report from the Intermediary Mortgage Lenders’ Association indicates a rather different and much more encouraging outcome. According to the latest annual market review, mortgage lending is set to reach its highest level since the credit crunch in 2007.
Currently, there is the prediction by many within the industry that 2018 will become the 8th consecutive year of mortgage lending growth. Indeed, the IMLA (Intermediary Mortgage Lender’s Association) has argued that lending will reach £265 billion in 2018 with this resulting in net lending of around £45 billion.
While these figures are undoubtedly positive the report has also warned that the property market in the UK is set to face “structural changes.” These include challenges that relate to turnover, supply and even the affordability models currently in place across the United Kingdom by the various lenders that are active on the market.
Additionally, much of the growth will be fuelled by remortgage activity with many within the industry predicting that remortgages could be worth a total of £94 billion in 2018 which is a 4.4% increase on the 2017 remortgage figures. This strong remortgage activity could fuel a “churn” in the market and could stimulate growth in house purchase lending as well.
Another key area to look at would be the intermediary lending market and this type of lending is also predicted to increase over the next 18 months. Indeed, intermediary mortgage lending could reach £158 billion this year and £164 billion in 2019. Essentially, this would mean that lending via intermediaries would account for 72.2% of the market up from 71.3% in 2017.
Most of these figures have been calculated through analysis of some of the current trends within the UK housing market and loans borrowed for housing purchases have also fallen below pre-financial crisis levels for the first time. When you consider that £261 billion has been injected into the property market since 2008 then you can really begin to see why housing equity has increased by £1.6 trillion since 2008.
Overall, the mortgage market is continuing to show its resilience despite shifting demographics and a shortage of housing supply which has created a structural break within the industry. While mortgage finance and stricter affordability rules are restricting activity for many, the United Kingdom’s withdrawal from the European Union is unlikely to cause the chaos that ensued during the financial crisis of 2007.
Indeed, the chronic shortage of affordable homes appears to be the biggest challenge facing the industry at present and there is the notion that everyone will have to come together to ensure that the market works for everyone by adopting new approaches to increase housing supply especially after we have left the European Union.