Gross lending could exceed its highest level in more than a decade this year, according to new predictions from experts.
 
Speaking on the latest Accord Mortgages Growth Series podcast, IMLA principal researcher, Rob Thomas, and UK Finance director of mortgages, Charles Roe, suggested unprecedented levels of government support have stimulated demand in the housing market.
 
Thomas, who initially forecast £283bn gross lending for the year – the highest since 2007 – revealed that if he was re-forecasting today, this figure would “likely only go higher”.
 
“What we’re forecasting for 2021 is in line with the monthly average of gross lending in 2020, excluding the three months of lockdown in April-June,” Thomas said.

“The market has performed well during the pandemic, lenders have done an extraordinary job and demand has been far higher than people expected. There was a lot of talk about a house price collapse and we’ve seen exactly the opposite.”
 
While UK Finance originally forecast a lower gross lending figure than IMLA, Roe also revealed he would revise a prediction of £215bn if re-forecasting today. He cited a combination of positive market indicators, including the success of the coronavirus vaccine rollout, had contributed to this, as he highlighted what may be needed from brokers this year. 
 
He commented: “I think we can expect increased demand from borrowers looking to squeeze in a purchase before the first or second step down in stamp duty, but advisers also need to take into account the end of the furlough scheme and what that means for borrowers, and the ending of the mortgage payment deferral scheme as there will be some customers who may find their mortgage is unaffordable and look to downsize.
 
“Product transfers are also likely to be a continuing feature for some customers as we’ve seen over the last nine months. It will be interesting to see how brokers adapt to the new normal, working remotely, which they’ve done with remarkable resilience in the last year.”
 
The Accord podcast also discussed how the Budget could affect the housing market in the coming months, with Thomas and Roe suggesting that unemployment rates, the closure of large organisations, and how accumulated savings could be spent in the coming months will all be indicators for the year ahead.
 
Thomas added: “It’s worth paying attention to inflation because there’s a risk that if we see that money – an average of £14,000 increased savings per household – being spent quickly we could see what I’d describe as a mini-boom in the economy, particularly in some sectors, where you could see some pressure on inflation.
 
“That’s important for the housing market too as we could see upward movements in interest rates later in the year, which is one argument for borrowers fixing their mortgage.”
 
Accord managing director, Jeremy Duncombe, who hosted the podcast, commented: “The last 12 months have had a monumental impact on the economy and in this latest Growth Series podcast it’s fascinating to hear both Rob and Charles discuss the knock-on effects to the housing market and the reasons behind their differing gross lending forecasts.”

Share Story: