Mortgage broker Henry Danell looked at the sector’s activity over the past decade and the first half of 2022 using data from the Bank of England. It found that mortgage market activity peaked in 2021 when it was the busiest it had been for 10 years.
The majority of business was generated by Monetary Financial Institutions (MFIs), which includes high street lenders. This part of the market processed 1.48 billion mortgage transactions in 2021, accounting for 89 per cent of the market. This was flat on the share these lenders had in 2020 and the number of transactions processed was up by 17 per cent.
Specialist lenders saw mortgage activity rise by 19 per cent compared with 2020 and processed 150,926 transactions. Specialist lenders held a nine per cent share of the mortgage market. Despite accounting for a small part of the sector, this was the highest number of transactions processed in a year.
Henry Dannell put this down to borrowers seeking alternative forms of finance.
The firm predicts the MFI segment will process 1.39 billion transactions and specialist lenders will handle 125,992 transactions.
This will represent declines of six per cent and 16.5 per cent respectively.
The central bank’s seasonally adjusted figures show that for the six months to June 2022, 782,381 mortgages were approved compared to 804,049 last year.
Geoff Garrett, director of Henry Dannell, said: “The mortgage activity boom of 2021 marked a high point for the market. The government’s pandemic intervention on the housing market, such as the stamp duty holiday, led to a surge in buyer demand that enabled lenders to grant more mortgages than ever before.
“But, as we enter the second half of 2022, confronted with a cost-of-living crisis and aggressive interest rate hikes, we can safely expect a significant decline in activity for both MFIs and specialist lenders.”
He added: “However, people often turn to specialist lenders in times of economic turmoil as they are more willing to take a chance on them. As we move further into this current cost-of-living crisis with families struggling to pay bills and meet loan repayments, we could well see a stronger performance where the level of mortgages coming via specialist lenders is concerned.”
