The mortgage market is expected to continue to grow over the course of 2021, according to the latest report from the Intermediary Mortgage Lenders Association (IMLA).
The ‘New Normal’ report predicts a rise in gross mortgage lending to £283bn this year.
In addition, it points to a to household spending as COVID-19 lockdown restrictions are eased.
According to the report, household finances will weather the current economic volatility as government support packages maintain financial stability.
The quantity of mortgage borrowers on payment deferrals at the end of 2020 had fallen from a peak of more than 1.8 million in June to just 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 just 0.28% of all loans, the lowest figure since current records began.
This combination of factors suggests that the UK’s mortgage market will not face an arrears crisis in 2021, the report detailed.
IMLA’s report also found that while household consumption was constrained in 2020 by social distancing measures, the subsequent build-up of household cash balances, £222bn between February and November 2020, provides the opportunity for a rapid return to spending in 2021.
This will provide a valuable injection to the economy and could help revive the hardest hit sectors, such as the hospitality and leisure industries according to the report.
Kate Davies (pictured), executive director at 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.”