Mortgage Market All Set To Improve Due To Stabilizing Political Environment | Credit Raters

Mortgage Market All Set To Improve Due To Stabilizing Political Environment

20 Jan 2020
Approx Reading time: 3 minutes
  • According to IMLA, mortgage lending is expected to increase by 1.4% in 2020 to £268 billion.
  • The increase comes as a consequence of a stabilizing political environment in the country following the elections in December, which has improved confidence in the housing market.
  • This forecast comes alongside reports that around 33% of all retirees in the UK this year would be carrying some form of debt into their retirement.

According to the Intermediary Mortgage Lenders Association (IMLA), mortgage lending in the current year and 2021 is all set to witness an improving trend, thanks to the confidence boost given to the British people about the impact of Brexit after the December elections.

The IMLA released a report called New Normal forecasting that gross figures of mortgage debt are expected to improve by an estimated 1.4% in the current year, reaching £268 billion in value. In the next year, this figure is expected to go up to £275 billion. This increase is expected to come from an increase in demand for the purchase of houses.

These estimates indicate a massive improvement over the decline in the mortgage market reported a year earlier. In 2019, lending for mortgage loans reduced by around 2%, with the total value standing at an estimated £264 billion.

According to the IMLA, the market share being held by intermediaries is likely to increase as well, reaching 80%, a slight improvement over 2019. Experts have also predicted that 5-year mortgage schemes offering fixed rates are likely to see an increase in demand due to higher benefit for borrowers, while the remortgage market would remain around £100 billion over the next two years due to borrowers shifting from their existing plans to a better one.

The report also showed an increase of 13.3% in the instances of product transfers between the first quarter of 2018 and the third quarter of 2019. According to the report, product transfers are expected to increase further by 4% in the current year and an additional 2% in the next year, reaching values of £172 billion and £176 billion, respectively.

The buy-to-let market is expected to sustain its decline over this time, as the government is expected to remove the relief in taxes being offered to landlords by April 2020. According to forecast figures, this would result in a buy-to-let market with a total value of £40 billion and £39 billion in 2020 and 2021, respectively.

The British people continue to face certain financial challenges, with those approaching retirement experiencing the greatest risk. According to reports, around 33% of all retirees in 2020 would still be carrying some debt on their shoulders, with 48% having debt on credit cards, 31% on bank loans, and 14% with pending mortgage payments.

On average, the amount of debt owed by this group amounts to £17,460, with 8% due to pay more than £20,000, and 4% reporting no knowledge of their outstanding debt balances. Around 15% believe it will take them 8 more years to clear their debt. However, 33% are afraid they might never clear their balances over the course of their life.

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Akbar Lashari

Akbar is a talented news editor who follows the consumer finance industry closely and has written for many famous news & educational websites such as Forbes.