According to The Intermediary Mortgage Lenders Association (IMLA) “New normal” report, this is above the £275bn forecast for 2022 at the end of last year.
The association said that this was driven by high levels of remortgaging, which accounted for around a third of gross lending.
The buy-to-let market also had a record year with estimated gross lending coming to £56bn.
The report continued that the majority of mortgage business went through intermediaries, with the share of distribution increasing from 80 per cent to 84 per cent.
IMLA said that this showed that lenders saw advantages of using intermediary channels, including lower fixed costs and flexibility to control volumes.
The association added that it expected intermediary share of the market to grow to 90 per cent by 2024.
Inflation is crucial element in mortgage market prospects
IMLA said that inflation would be a “key factor” in determining the mortgage market’s prospects, noting that if it remained above the Bank of England’s target of two per cent in 2024 then it would have to continue adjusting the base rate to control inflation.
The higher interest rates could lead to gross mortgage lending falling to £265bn in 2023 and £250bn in 2024.
The report added that buy-to-let lending would also contract to £47bn in 2023 due to a “tougher economy”.
Households in negative equity to reach 16,000 by 2024 but still below 1990s
IMLA added that in certain respects the effects of the cost of living crisis on homeowners not been as severe as expected.
The trade body said that it expected the number of households in negative equity would only reach 16,000 by Q4 2021. The average negative equity figure was pegged at £4,300.
IMLA said that many experts had drawn comparisons with the housing downturn in the 1990s when 1.8 million households were in negative equity.
The trade body said that the situation now was different as there was a lower proportion of higher loan to value lending, rapid house prices since the pandemic and bigger uptake of capital repayment mortgages so more borrowers had paid down their mortgage balance.
It added that the above combined with more “rigorous lending criteria and enhanced lender forbearance” meant actual possession figures are expected to be less than held of those reported in 2009.
‘New normal appears to be uncertainty’
Kate Davies (pictured), executive director at IMLA, said that after the two years of economic turmoil during the pandemic this year was “widely expected to be a year of recovery and a return to stability”.
She continued: “However, the new normal appears to be uncertainty, with lockdowns in China continuing to impact supply chains, Russia’s invasion of Ukraine triggering rapid rises in energy prices, and political upheaval in the UK directly affecting mortgage rates.”
Davies said that despite this the mortgage market had “remained resilient” and the report showed that intermediaries were “continuing to play a particularly important role in the sector, helping borrowers to find the mortgages they need as they try to move onto or up the ladder, or remortgage at a time when rates are higher than in recent years”.
She said that looking ahead there would be “significant challenges” facing the mortgage sector and wider economy.
“We expect persistent inflation and the Bank of England response to weigh on the market, which will have an impact on lending as buyers choose to hold off on moving home or investing in a buy-to-let property.
“However, where buyers are looking to secure their next mortgage, we have no doubt that the intermediary market will continue to support consumers and that a growing number of people will be turning to brokers to help them navigate the mortgage journey in these uncertain times,” Davies concluded.
