IMLA expects healthy property lending growth in 2025
The Intermediary Mortgage Lenders Association (IMLA) has predicted that property lending will see healthy growth in the year ahead, while arrears are set to fall.
In a new report, IMLA has forecast that gross mortgage lending will increase by 16 per cent to £275bn in 2025, while buy-to-let lending will grow by 14 per cent to £38bn.
Remortgaging is set to rise by 13 per cent to £88bn as affordability improves.
Meanwhile, arrears will carry on falling to approximately 0.94 per cent of loan balances.
The share of mortgage business conducted through intermediaries will continue its upwards trajectory, rising from 87 per cent in 2024 to 89 per cent in 2025 and 91 per cent in 2026, IMLA said.
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The increase in lending will be underpinned by lower interest rates and a rise in demand for remortgaging as affordability pressures ease.
“After a period of economic volatility, high inflation, rising borrowing costs and great uncertainty, the environment feels rather more settled, and the housing and mortgage markets are coping surprisingly well with the ‘new normal’, after the ultra-low interest rates of the last decade,” said Kate Davies, executive director of IMLA.
“2025 looks to be a year of greater stability and modest but welcome growth. Brokers will no doubt welcome a shift in emphasis from product transfers to remortgaging, and the opportunity that offers to fully assess their clients’ needs and scour the market for the most suitable solutions.”
Davies added that buy-to-let landlords will continue to face the challenge of increased regulation and higher taxes and will be looking to run their property businesses as efficiently as possible. Many will rely on professional guidance in this endeavour.
“With decreasing interest rates and almost a third of remortgagors coming off fixed deals faced with lower-cost mortgages in 2025, arrears will continue to fall from their very low base,” she added.
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“This is good news for borrowers and lenders alike, and reflects both the effectiveness of lenders’ initial underwriting procedures and also their flexibility in helping borrowers who get into difficulty.
“In a growing and increasingly competitive market, in 2025 mortgage advisers will play an even greater role in helping borrowers find the optimal solutions for their individual needs, with the share of business going through intermediaries set to break the 90 per cent barrier in 2026 for the first time in the history of the market.”
The IMLA report suggested that there will be no return to the ultra-low-interest-rate environment that characterised the 10 years to 2022, with interest rates expected to settle at between three and four per cent.
IMLA noted that in terms of affordability, the average new borrower currently spends around 15.5 per cent of their income on mortgage interest. That figure is set to fall slightly as rates come down, modestly improving affordability.
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