New predictions are suggesting that the overall amount lent for mortgages in 2021 could reach a staggering £285 billion as the market bounces back from the COVID-19 pandemic.

If this comes to pass, that figure would be the highest lending total for the UK mortgage market since way back in 2007, when the term COVID was not something you heard every day (remember that time?)

What predictions have been made?

These predictions come from the IMLA – the Intermediary Mortgage Lenders Association.

These lot have their finger on the pulse when it comes to the mortgage industry and what’s being spent. They are saying that £285 billion is a fair estimation of what overall lending will be come the end of 2021.

The IMLA had previously predicted the overall lending figure for 2021 would be around the £283 billion mark. But revised figures in light of some prescient industry trends has made their predicted total even higher. 

If these predictions do come to pass, then a 14 year high in lending would be a pretty strong indicator that the mortgage market is recovering well from the setbacks brought about by the COVID-19 pandemic.

What is behind these predictions?

The reasons for such healthy lending at present are multiple.

One of the major drivers throughout 2021 has been the stamp duty holiday. The opportunity to avoid having to pay expensive stamp duty tax has encouraged many people to get ahead with their mortgage plans in 2021 and secure a deal that is suited to their requirements.

The government’s scheme to support first-time buyers with 5% deposits has also galvanised the market, enabling more people with lesser financial means to secure their own home. 

Other elements are also at play. Product transfers have reached record levels say the IMLA, while an increase in buy-to-let lending has also been a factor. According to the IMLA, buy-to-let lending is expected to reach £13 billion of purchase lending this year, its highest point since 2016.

Will this come to pass? 

Though only a prediction, the IMLA is in a great position to deduce what powers are at play within the mortgage industry. 

Given this, these predictions hold a fair level of credence and it seems likely that lending will indeed reach the £285bn mark come the end of 2021.

Will it continue into 2022 and beyond?

The IMLA doesn’t think so. Having previously predicted that 2022 would see lending in the region of £286 billion, revised predictions indicate that 2022 is more likely to see £280 billion lent for mortgage purchases.

A further prediction that may be less welcome for readers is that house prices are set to rise by 1.6% in 2022.

Add to this the fact that the stamp duty holiday is set to wind down, and the government’s support for 5% deposit mortgage applicants is also only set to run until 2023, then the longer term future of the industry is harder to calculate.

For now though, it’s good to see mortgage lending in a healthy position, and should provide cause for optimism if you are a first time buyer, or remortgaging. 

As always, Roots Mortgages can provide expert contractor mortgage and freelancer mortgage support if you want to join the ranks of people borrowing in 2021. And you can take advantage of our free mortgage advice if you’re wondering what the best path for you may be.