Bennett is to pursue other interests, as well as spending more time with her family, the trade body said.
She is leaving the position at the beginning of March but will remain as a part time senior adviser to oversee the transition and “provide strategic input on mortgages and housing”.
A search is underway for her replacement, UK Finance confirmed.
Prior to joining UK Finance, Bennett was deputy head of compliance at The Northview Group.
She replaced Paul Smee, who retired as director general of the Council of Mortgage Lenders (CML) in its merger with UK Finance.
Bennett had also worked at the CML between 2001 and 2014, including a 10-year stint as head of policy.
In 2010, she was awarded an OBE for services to the financial services industry in the Queen’s birthday honours list.
In an interview with Mortgage Solutions, just 10 months into her role last year, Bennett likened the current regulatory landscape to “air traffic control” with a “plethora of initiatives” coming from watchdogs, including the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).