Gross mortgage lending fell by 28% in 2023 to total £225.5bn, according to figures from the Intermediary Mortgage Lenders Association (IMLA).

Within the total, lending for house purchase fell 30% to £135bn and remortgaging declined by 24% to £82bn.

IMLA suggested that higher mortgage rates have been the main factor driving the downturn.

In its New Normal report, the association has forecast that gross mortgage lending will fall further in 2024, to £205bn, before recovering slightly to £210bn in 2025. This includes lending figures for house purchase of £120bn and £122bn, respectively, and remortgaging totals of £78bn in 2024, and £80bn in 2025.

IMLA executive director, Kate Davies, commented: “After the shocks that have buffeted the global economy in recent years – lockdowns in 2020 and 2021 and the Russian invasion of Ukraine in 2022 – 2023 saw a welcome respite and a partial return to normality as the disruption from supply chain and war-related dislocation eased considerably.

“However, our ‘new normal’ is a higher interest rate environment than the one to which we became perhaps too accustomed post-financial crisis. The increase in base rate from 0.1% to 5.25% in just over two years has inevitably subdued the mortgage sector to a degree.”

IMLA also revealed that it expects mortgage intermediaries’ share of lending to keep rising, from 84% last year to 89% in 2024, and over 90% in 2025.

However, the report suggested the rise in share of business is not enough to prevent the value of lending arranged by intermediaries falling 6% in 2024. The following year is excepted to then be better, with IMLA predicting a 4% rise in broker business volumes in 2025.

“The housing market has proved remarkably resilient and mortgage affordability is comfortable for the typical borrower – although longer mortgage terms are no doubt a factor,” Davies added.

“In these more challenging times, intermediaries have played a key role in directing borrowers to the most appropriate financial solutions for their needs, and their advice will continue to be vital for the borrowing community in 2024 and beyond.”

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