IMLA predicts a rebound in the mortgage market in 2021
It will be an excellent year for mortgages.
Home loans should hit £ 283bn in 2021, rebounding from a year in the pandemic, according to the New Normal report from the Intermediary Mortgage Lenders Association.
Gross lending reached an estimated £ 241.6bn in 2020 as the market was forced to come to a near-complete halt before the stamp duty holiday triggered demand.
A reduction in household consumption due to the pandemic has resulted in the accumulation of household cash balances, according to IMLA. This should provide the opportunity for a quick return on spending in 2021.
“The predictions for this year are optimistic.”
Kate Davies, the IMLA CEO, said: “Many have predicted pessimism for the housing market since the crisis began. However, our analysis shows that there is room for more optimistic thinking.”
“Since the first lockdown in March, the mortgage market has shown remarkable resilience. Spending more time at home has led many to rethink their living conditions, helping to drive demand for homes across the UK.”
“This increase in interest has been supported by the government’s stimulus package, which in most cases has helped support people much better than in previous financial crises. The combination of these factors leads us to believe that 2021 will be a year of modest growth for the housing and mortgage markets.”
The report also called for an extension or reduction of the stamp tax holiday, which was due to end on March 31, to prevent home buyers from missing out on the reduction.
Meanwhile, IMLA attacked the stress tests, saying that the 3% mortgage stress test introduced in 2014 is no longer relevant to market conditions, given that long-term interest rates have fallen since then.
Davies added: “This year presents an opportunity for positive change in the housing and mortgage market. While the market faces immediate challenges in the form of the stamp duty deadline, there is a clear opportunity once we get through this crisis to lay the foundations for a sector that is more vibrant, fair, and efficient than before.”
“A coherent, long-term government housing strategy, including the delivery of thousands of new homes to a new generation of homeowners, and collaboration with the mortgage industry to enable the purchase of those homes will be vital to deliver a market that meets Britain’s housing needs for decades to come.”
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