The report said broader economic recovery, increased housing construction and demand-side incentives for the purchase of new build properties would spur a growing appetite for mortgage lending over the next four years.
Gross mortgage lending is expected to increase at a compound annual growth rate – the average rate of an investment’s growth over a variable period of time -of 7.06% over the next four years. The fastest period of gross mortgage lending is expected to occur during 2017, with a forecast rate of 11.7%.
However, this is a slower rate of growth than recorded in 2014 and 2013, where lending grew by 15% and 22%, respectively.
Timetric predicted total gross lending to reach £218.6bn in 2015, before rising to £241.6bn in 2016, culminating in a total of £286.8bn in 2019.
The report also predicted repayments to increase in line with the forecast Bank Base Rate rise which is expected to lead to a subsequent increase in lenders’ mortgage interest rates. A number of banks have already started to up rates across their mortgage deals ahead of a rate rise announcement, with TSB and Halifax among lenders to push up selected rates last week. Outstanding mortgage balances are forecast to grow at a slower pace as a result of increased repayments, reaching £1.33trn by the end of 2015 and £1.39trn in 2019.
Ben Carey-Evans, analyst at Timetric, said: “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.
“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.”
