The Intermediary Mortgage Lenders Association (IMLA) predicted this would increase further to 90 per cent of the mortgage market by 2025. This will be a rise from mortgage brokers conducting 84 per cent of the market in 2022.
However, a contracted market could result in the value of lending arranged by mortgage brokers falling by six per cent next year. This is expected to rebound in 2025 with a four per cent increase in business volumes.
A smaller mortgage market
IMLA estimated that gross mortgage lending in 2023 fell by 28 per cent annually to £225.5bn. Lending for house purchase was estimated to have fallen 30 per cent to £135bn and remortgage activity by 24 per cent to £82bn.
The organisation said gross mortgage lending would slip even further in 2024 to £205bn, then rise to £210bn in 2025. IMLA predicts that house purchase lending will total £120bn in 2024 and £122bn in 2025, while remortgage activity will come to £78bn and £80bn respectively.
Better mortgage affordability
IMLA predicted that mortgage affordability would become “manageable for the average borrower” in 2024, after pressures on the majority of this year. It said this would return to affordability levels seen before the 2008 financial crash.
Its data showed that in the first nine months of 2023, home movers used an average of 12.7 per cent of their gross income on mortgage interest payments and first-time buyers used 16 per cent. This was a smaller share than the long-run averages of 13.8 per cent and 14.8 per cent respectively, but IMLA said it still reflected the difficulties faced by buyers.
Entering a new normal for the mortgage market
Kate Davies (pictured), executive director of IMLA, said: “After the shocks that have buffeted the global economy in recent years – lockdowns in 2020 and 2021 and the Russian invasion of Ukraine in 2022 – 2023 saw a welcome respite and a partial return to normality as the disruption from supply chain and war-related dislocation eased considerably.
“However, our ‘new normal’ is a higher interest rate environment than the one to which we became perhaps too accustomed post-financial crisis. The increase in base rate from 0.1 per cent to 5.25 per cent in just over two years has inevitably subdued the mortgage sector to a degree. Yet the housing market has proved remarkably resilient and mortgage affordability is comfortable for the typical borrower – although longer mortgage terms are no doubt a factor.
“In these more challenging times, intermediaries have played a key role in directing borrowers to the most appropriate financial solutions for their needs, and their advice will continue to be vital for the borrowing community in 2024 and beyond.”
