The UK mortgage market is set for a quieter 2022 after the high levels of activity seen across 2021, the Intermediary Mortgage Lenders Association (IMLA) has predicted.

A new report from the trade body, which makes a series of predictions about the mortgage market over the coming year, has stated that the remortgage market will be stronger in 2022, reaching £89bn, compared to £82bn in 2021.

This is a result of lenders prioritising house purchase lending during last year’s stamp duty holiday, with lower predicted house purchase volumes going forward encouraging lenders to focus more heavily on the remortgage market.

In its report last year, IMLA had forecast gross mortgage lending of £283bn for 2021, a figure that was surprise to many commentators but ultimately close to the true final total of £304bn, the best performance for the industry since 2007. IMLA also estimates that the total value of housing transactions reached a record of nearly £370bn in 2021.

However, the 2022 report predicts a decrease in gross mortgage lending to £275bn this year, with a further fall to £265bn in 2023. The trade body also forecasts that gross buy-to-let lending will fall back from £44.5bn in 2021, to £38bn in 2022, and £37bn in 2023.

IMLA executive director, Kate Davies, said that 2021 was “highly successful” for the mortgage market, despite the difficult conditions created by the pandemic.

“Lenders have responded remarkably well to the difficulties presented by COVID-19, particularly given the operational pressures created by a time-limited stamp duty holiday,” Davies commented. “IMLA estimates gross mortgage lending in 2021 will have reached £304bn, the best performance since 2007, driven by the stamp duty holiday and by unprecedented fiscal and monetary support from government.
 
“It should come as no surprise that 2022 is set to be more subdued, especially with COVID related government support likely to come to an end. Despite this, the remortgage market is well placed to thrive in the coming year and, while interest rates may rise, mortgage rates will remain close to the all time lows of 2021.”

IMLA also announced that it welcomes the decision by the Bank of England Financial Policy Committee (FPC) to consult on withdrawing its stressed affordability requirements. The trade body had been calling for a review of the affordability stress test, believing the removal of the 3% stress in the affordability calculation, should it occur, would result in more borrowers being able to meet the challenge of buying in 2022 and beyond.

“Looking ahead through 2022, we shall continue to press for a coherent, long-term housing strategy from the government, including the promised delivery of hundreds of thousands of new homes for a new generation of homeowners,” added Davies.

“Lenders will continue to develop and engage with schemes to replace the Help to Buy scheme, which comes to an end in 2023, and thus continue to help first-time buyers achieve their dream of home ownership.”

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