Gross mortgage lending is set to reach £268bn in 2020 and £275bn in 2021, the Intermediary Mortgage Lenders Association has forecast.

The trade body’s predictions are more bullish than those of UK Finance, which said in December that it expects lending to fall from an estimated £264bn this year to £254bn next year, before increasing modestly to £257bn in 2021.

Imla says the growth it is forecasting follows an anticipated fall of 1-2 per cent in gross mortgage lending for 2019 when the figures are finalised.

Much of this growth will be driven by house purchase activity, supported by wage increases and low interest rates, it says.

Intermediaries are expecting to continue to grow their market share to 77 per cent of total mortgage business in 2020 and 2021, according to the trade body.

However, this growth is partly reliant on the UK’s ability to negotiate a trade deal with the EU.

On top of this Imla is expecting remortgaging, which has previously been the main driver of growth, to remain flat at around £100bn a year over the next two years.

This is the result of more borrowers taking product transfers and the increased popularity of five-year fixes. 

Product transfer volumes grew by 13.3 per cent between Q1 2018 and Q3 2019.

Imla expects these internal switches to grow again by 4 per cent in 2020 to £172bn and a further 2 per cent in 2021 to £176bn.

The trade body expects buy-to-let lending of £40bn in 2020 and £39bn in 2021 following the tax clampdown on landlords.

The scaling back of Help to Buy from 2021 could also weigh on the market unless alternative schemes become available, it says. 

Imla executive director Kate Davies says: “The next two years certainly look positive for the mortgage market. 

“In 2019 the sector remained resilient in the face of ongoing political uncertainty, but our report shows that a boost in consumer confidence is likely to support modest growth over the next two years.

“Intermediaries are driving a large part of that growth as borrowers continue to seek out the expertise of advisers to help them find a mortgage.”

Davies adds: “Although we expect modest growth for the mortgage market over the next two years, Britain’s housing market is still far from perfect.

“The buy-to-let sector continues to be under pressure from a spate of tax and regulatory measures enacted over the last five years and IMLA continues to call for a moratorium on any further changes to the Private Rented Sector.

“The planned restriction and eventual closure of Help to Buy also requires the industry to consider new ideas. 

“More than 200,000 housing transactions have been supported by Help to Buy equity loans since their launch and without suitable alternatives first-time buyers will have fewer alternatives.”

She calls on the new government to bring together lenders, house builders and the regulator to identify solutions to replace the scheme.