There is to be a growing demand for mortgage lending over the next four years, driven by a wider economic recovery, greater housing construction and more-tempting incentives.
That is the result of a report from a report by Timetric, which suggests that there is to be a boom in the coming years.
Optimism
The greatest growth in mortgage lending is expected in 2017, with a forecasted rate of 11.7%. This prediction coincides with the Office for Budget Responsibility also suggesting that the largest rise in British property prices will occur during the same period.[1]
Timetric expect that gross lending will hit £218.6bn by the end of the 2015, before rising further to £241.6bn in 2016, eventually reaching £286.8bn in 2019.[1]
However, mortgage outstanding balances are expected to grow at a slower pace. Repayments are also likely to increase as a broader economic growth generates a rise in the official Bank of England policy rate and an increase in banks’ mortgage interest rates. Outstanding balances are tipped to hit £1.33 trillion by the end of this year, rising to be £1.39 trillion by 2019.[1]
Rising rates
Ben Carey-Evans, Analyst at Timetric, commented, ‘rising interest rates, combined with reduced growth in the UK housing market, is set to stunt increases somewhat from the 15% and 22% rates seen in 2014 and 2013 respectively. Improving economic conditions, however, particularly the continuation of improving real wages – due to extremely low inflation – should see gross lending rising at a steady rate up to 2019.’[1]
‘Growth in the mortgage market will be supported by rising house prices necessitating larger-value loans, and regional variations in house prices will continue to influence the distribution of mortgage lending,’ Carey-Evans concluded.[1]
[1] http://www.propertyreporter.co.uk/finance/mortgage-lending-to-reach-2868bn-by-2019.html