If the market achieves this level of mortgage lending it will mark the best performance since 2007.
Gross mortgage lending in 2020 is estimated to have reached £241,600. And following an expected strong performance this year, gross lending is forecast to rise to £286bn in 2022.
IMLA predicts buy to-let lending will rise from £38bn to £40bn this year and £41bn in 2022.
In the trade body’s latest report, New Normal, it predicts a swift return to household spending when lockdown restrictions are eased this year and the avoidance of a mortgage arrears crisis.
As household consumption was constrained in 2020 because of social distancing and lockdown measures families built up cash balances of £222bn between February and November, an average of £13,400 for a family of four. The cash reserves will give families spending power when lockdown restrictions are lifted in the spring helping to revive industries such as hospitality and leisure, said IMLA.
At the end of 2020, mortgage borrowers on payment deferrals had fallen from a peak of more than 1.8 million in June to 127,000 by 20 November.
The number of mortgages in arrears of three to six-months continued to fall in the third quarter of 2020 to 0.28 per cent of all loans – the lowest figure since current records began.
IMLA said this combination of factors suggested that the UK’s mortgage market will not face an arrears crisis in 2021.
Kate Davies (pictured), executive director IMLA, said: “Many have predicted doom and gloom for the housing market since the crisis began. However, our analysis shows there is room for more optimistic thinking.
“Since the first lockdown back in March, the mortgage market has shown remarkable resilience. Spending more time at home has led many to reconsider their living arrangements, helping to boost demand for homes across the UK. This surge in interest has been supported by the Government’s stimulus package, which in most cases has helped to support individuals far better than has been the case 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.”