IMLA says mortgage lending will hit a 10-year high this year

A new white paper from the Intermediary Mortgage Lenders Association (IMLA) predicts that mortgage lending will hit a ten year high this year.

IMLA’s predictions for gross mortgage lending in 2017 exceeds the 2016 figures, as reported by the Council of Mortgage Lenders (CML), by 5.9%. IMLA estimates gross mortgage lending to reach £260bn this year, compared to the £254bn reported by the CML for 2016. These predictions are published in a report entitled, ‘The new normal – prospects for 2017’.

Net mortgage lending is estimated to reach £45bn this year, according to IMLA, a figure not seen since 2007.  This suggests a rise of 3.4% in the total stock of mortgage debt, thus slightly exceeding the growth of disposable income expected by the Office for Budget Responsibility (OBR).

Explaining the reasons for the resilience that the mortgage market has shown, in spite of the macroeconomic uncertainty brought about by the Brexit vote, IMLA cites the imbalance between supply and demand within the housing market, along with the low Bank of England Base Rate and modest rises in inflation.

It is these conditions that have made consumers more relaxed about taking on greater levels of debt, IMLA says.

The amount that borrowers spend on paying off their mortgage interest is also at a low, which points to improving affordability, IMLA says. Home movers spent an average of 7.2% of their income on interest payments in 2016, while first time buyers spent an average of 9.1%.

IMLA suggests mortgage lending will continue to growth, given that the favorable conditions, such as the low Bank of England Base Rate and stable economic outlook are expected to continue.

Peter Williams, executive director, IMLA said: “The mortgage market shook off uncertainty and turbulence to register another solid year in 2016, and IMLA predicts that the market is set to do the same again in 2017.

“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. 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.

“Looking ahead, this momentum in the market is unlikely to be derailed any time soon. While the General Election in June could lead to further uncertainty, and the outcome of the Brexit negotiations are still unclear, the mortgage market is in rude health and the strong fundamentals underpinning it are unlikely to change.”


IMLA predicts that remortgage lending will hit £90bn in 2017, accounting for 35% of all lending. In 2018, it forecasts that remortgage lending will reach £92bn, therefore suggesting that the remortgage market will continue to be the most active sector of the market for the next two years.  Record low mortgage rates and rising housing equity have prompted borrowers to switch deals, in order to benefit from these conditions.

Buy to let

The buy to let market paints a different picture, as the restriction on landlords’ mortgage interest deductibility and 3% Stamp Duty surcharge have impacted this sector’s growth.

IMLA estimates that gross buy to lending will fall 6% year-on-year to £38bn in 2017.  It is the decrease in buy to let lending for house purchase, which IMLA predicts will fall by almost 17% in 2017 to £12.4bn, which has resulted in this decline. 

Nevertheless, IMLA believes that 2017 will see the buy to let market bottom out, making way for a modest rise in 2018 to £40bn.




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