Mortgage activity is forecast to fall by 6% in 2022 as the market responds to the flurry of interest rate hikes, new analysis by Henry Dannell has indicated.

The broker looked at mortgage data from the past decade as well as from the first six months of this year, and suggested that mortgage market activity peaked in 2021.

Henry Dannell suggested this was driven by high street lenders, including banks and building societies, which processed 1.49 million mortgage transactions last year. This figure accounted for 89% of the total mortgage market and marked an annual increase of 17%.

Specialist lenders also saw a significant interest in mortgage activity, rising by 19% since 2020 to process 151,000 transactions, which made up 9% of total mortgage lending activity that year. Despite this small market share, Henry Dannell noted that 2021 still marked a high point for specialist lenders as they processed the most annual mortgage transactions on record, which was likely due to the economic impact of the pandemic forcing borrowers to look for new ways of securing loans.

Despite the 2021 boom, however, rising interest rates are likely to dampen the mortgage market in 2022, with Henry Dannell forecasting a 6% drop in activity among high street lenders, and a 16.5% drop in specialist lending.

“The mortgage activity boom of 2021 marked a high point for the market,” said Henry Dannell director, Geoff Garrett. “The government’s pandemic intervention on the housing market, such as the stamp duty holiday, led to a surge in buyer demand that enabled lenders to grant more mortgages than ever before. 

“But, as we enter the second half of 2022, confronted with a cost of living crisis and aggressive interest rate hikes, we can safely expect a significant decline in activity for both monetary financial institutions and specialist lenders. 

“However, people often turn to specialist lenders in times of economic turmoil as they are more willing to take a chance on them. As we move further into this current cost of living crisis with families struggling to pay bills and meet loan repayments, we could well see a stronger performance where the level of mortgages coming via specialist lenders is concerned.”

Share Story: