Healthy UK Housing and Mortgage market for 2016

According to a new report by Timetric, gross mortgage lending in the UK will be rising at a steady rate up to 2019, driven by improving economic conditions and low deflation as seen in April 2015.

property news

The Gross lending registered considerable growth during 2015, especially from June to October, increasing at an average monthly rate of 3.3% and increasing by 29.4% overall.

Monthly lending was recorded at GBP21.5 billion for October following a growth of 15.9% from September, as low inflation and low interest rates continued to drive the market. The substantial growth was also attributed to lenders cutting interests rates in a late attempt to hit targets before Christmas.

According to Timetric’s Analyst Ben Carey-Evans:

“The mortgage market stabilised earlier in 2015 due to greater employment and stamp duty reforms. These trends continued, and combined with record low interest rates and inflation were the driving force behind the surge in lending in the latter part of the year.”

Looking further ahead, gross lending is expected to increase at a CAGR of 6.8% in the next five years. The fastest growth is set to be in 2017, with a forecasted rate of 11.7%, which is largely due to the Office for Budget Responsibility predicting the year to see the largest growth in UK house prices over the period. Timetric expects gross mortgage lending to reach GBP265 billion in 2016 and 320 billion in 2020.

This growth will be further supported by a surge in house price necessitating larger-value loans, as well as regional variations in property prices which will continue to influence the distribution of mortgage lending.