The mortgage market will reach its highest level of gross lending since the financial crisis during 2017, the Intermediary Mortgage Lenders Association (IMLA) has predicted.
As part of a new white paper - 'The new normal - prospects for 2017' - the IMLA has forecast that gross lending will reach the £260 billion mark this year, a figure almost 6% higher than the £245 billion recorded by the Council of Mortgage Lenders in 2016.
The association predicts that net lending will hit £45 billion this year, which would also be the highest total recorded since 2007.
IMLA says net lending of £45 billion would mean that the total stock of mortgage debt will grow by 3.4% this year.
“There are many factors that have contributed to the continued strength of the mortgage market and are likely to support its growth over the rest the year,” explains Peter Williams, IMLA’s executive director.
“The market has been supported by high levels of public demand for housing from a variety of different customer profiles. Furthermore, low mortgage rates and relatively modest levels of inflation have instilled borrowers with confidence, and made them willing to take out loans for purchase.”
He says that despite ongoing Brexit negotiations and the prospect of another General Election, the IMLA expects the mortgage market to remain resilient thanks to the strong fundamentals that currently underpin it.
The white paper suggests that remortgaging will continue to be the most buoyant part of the lending market over the remainder of the year.
In total, IMLA expects remortgage lending to reach £90bn in 2017, which is 35% of overall lending.
In 2018, remortgage lending is forecast to grow to a total of £92bn.
Due to a number of government measures that have been introduced to stunt the growth of the buy-to-let market, IMLA predicts that gross buy-to-let lending will decline by 6% year-on-year to £38bn in 2017.
This decline has been driven by a fall in buy-to-let lending for house purchase, which IMLA expects will fall by nearly 17% in 2017 to £12.4bn.
However, IMLA believes that the buy-to-let market has bottomed out, and that lending will rise modestly to £40bn in 2018.
“Different segments of the mortgage market had contrasting years in 2016," adds Williams.
"The remortage market performed very well, with existing borrowers eager to take advantage of rising house prices and low rates by securing a new deal."
He says it will be interesting to see if the remortgage market can maintain this momentum in the long-term.
On the buy-to-let market, Williams comments: "The buy-to-let market suffered under the changes introduced by the Cameron government, but ultimately demand for private rented accommodation means that lending volumes are likely to rise again in the future."
"While the changes have certainly made things more difficult for landlords, property remains an attractive and comparably stable investment, which will support long-term growth in the sector.”