Lenders expect return to “stable” conditions next year

Mortgage lending in the United Kingdom will total £316bn this year, the highest figure since before the global financial crisis, according to UK Finance.

The trade body, which represents mortgage lenders, calculates gross mortgage lending will have increased 31% on 2020, fuelled by the stamp duty tax cut and people moving home due to remote working flexibilities. Total house purchase transactions are expected to top 1.5 million, some 47% higher than last year and the biggest figure since 2007.

However, UK Finance also predicts lending will fall 11% next year to £281billion, which would still be higher than any other year post-financial crash. It then forecasts lending to rise again in 2023 to £313billion.

James Tatch, principal, data and research at UK Finance, said: “2021 has been a record year for mortgage lending amid the stamp duty holiday and homeworkers moving from cities.

“The outlook for the housing and mortgage markets over the next two years is for a return to more stable, balanced picture following the upheavals of the last two years.

“While risks remain, both to new lending and ongoing affordability, the market looks to be emerging from the pandemic in a better place than previously anticipated, supported by a much-improved wider economic outlook.”

This picture of a busy year in terms of house buying in 2021 followed by an expected moderation next year was also emphasised by Rightmove in its monthly house price index today, which reported a 0.7% fall in prices for the month.

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The online property portal also expects around 1.5 million completed home sales for the year, the highest since 2007. It said: “As an exceptionally busy 2021 draws to a close, Rightmove expects a closer to normal though still busy market in 2022.

“One sign of a return to traditional norms is the continuation of the seasonal fall in the price of property coming to market, down by 0.7% (-£2,234) on the month, compared to a 0.6% fall this time a year ago.”