Mortgage Solutions has seen confidential figures from the trade body which predict a near 25% fall in the value of repeat business being completed in 2020.
Overall, UK Finance expects a 12% drop in lending in 2020, with the residential remortgage and product transfer markets down 23% and 25% respectively.
The buy-to-let market is also likely to be hit hard with a 23% drop in remortgaging predicted.
The impact may be particularly significant for brokers as remortgaging has been driving the market for the last year and seems set to do so in 2019.
The UK Finance data predicts gross mortgage lending will rise to £278bn in 2019 from £268bn this year, before dropping sharply to £246bn in 2020.
Homeowner remortgages are expected to continue rising to £95bn in 2019 from £86bn this year, but by 2020 they are forecast to slump to £73bn.
Product transfers are expected to fall to £125bn in 2020, after an increase next year to £166bn from £151bn in 2018.
Meanwhile, buy-to-let remortgages are predicted to increase to £30bn next year from £27bn in 2018, before dropping to £23bn in 2020.
Brokers and market experts noted that the drop is likely the result of customers taking out long-term deals, and highlighted that diversifying business might be essential to mitigate the impact.
Tony Wornell, from research agency BVA BDRC, agreed that the combined product transfer and remortgage market will slightly rise over the next year or two, driven by low interest rates.
He said: “Following the peak, I would expect to see re-mortgage and product transfer activity slowing after 2019 because interest rates are likely to rise and more borrowers are taking long-term fixed rates.
“The effect of this is to take them out of the active market until their deal ends.”
David Hollingworth, director of L&C Mortgages, said as more people were in five-year fixed deals, they were not looking at remortgaging. Instead new customers and income streams could be vital.
He added: “Looking after existing customers will continue to be important. As product trends shift, advisers will potentially find that they will not see some of their existing clients as regularly as they had in the past.
“While it will be crucial to keep in touch with existing customers as closely as ever, it will also become important to be able to attract new customers.
“Being overly reliant on repeat remortgage business can see peaks and troughs like any other part of the market, so having diversity in the business should help to minimise the impact.”
Also Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said intermediaries needed to ensure they were focusing on other opportunities in the market.
This could include growth areas, such as later-life lending, inter-generational lending, new build and specialist buy to let to name but a few.
He added: “Good advice is absolutely key in these areas and so they represent opportunities to thrive in, particularly as lending options in this area become more and more sophisticated.”
Cunnington pointed out that a small drop would not be a surprise, but the competitive market among lenders may remain in 2020.
He added: “This will help to keep rates low and the gap between a new fixed-rate and the lenders’ standard variable rates (SVRs) will stay high, which will mean the remortgage market will certainly remain buoyant.”
Arrears and possessions steady in 2020
A small bright spot from the data were encouraging figures showing that mortgage arrears and possessions are likely to remain generally steady in 2020.
Mortgage accounts in arrears are expected to rise slightly to 87,300 in 2020 from the 84,100 predicted in 2019. The same figure stood at 82,100 this year.
Possessions are expected to increase slightly to 7,100 in 2020 from 7,000 in 2019. This year possessions stood at 6,700.
However, property transactions will be likely to fall following the entire market, with UK Finance predicting a drop to 1,100,000 in 2020 from an expected 1,139,000 in 2019.
This year the property transactions stood at 1,188,000.
UK Finance declined to comment on the figures.