The report observed that the remortgage market will be stronger in 2022, reaching £89bn, compared to £82bn in 2021.
IMLA forecast that gross buy-to-let (BTL) lending will fall back from £44.5bn in 2021, to £38bn in 2022 and £37bn in 2023.
IMLA also said bond markets are continuing to signal that interest rates will remain historically low for the foreseeable future, with the yield on 50-year UK gilts at 1.0%, despite market expectations of short-term rate rises.
Regarding distribution, intermediaries are set to remain the dominant channel, serving nearly 80% of the market.
While IMLA said it expects the intermediaries’ share of distribution to drop very slightly in 2022 and 2023, it forecast that this too will remain near record levels – just below 80% of mortgage advances by value.
IMLA has also welcomed the Bank of England’s Financial Policy Committee’s (FPC) decision to consult on withdrawing its stressed affordability requirements.
Kate Davies, executive director of IMLA, said: “2021 was a highly successful year for the mortgage market despite the difficult conditions created by the pandemic.
“Lenders have responded remarkably well to the difficulties presented by COVID-19, particularly given the operational pressures created by a time-limited stamp duty holiday.
“IMLA estimates gross mortgage lending in 2021 will have reached £304bn, the best performance since 2007, driven by the stamp duty holiday and by unprecedented fiscal and monetary support from government.
“It should come as no surprise that 2022 is set to be more subdued, especially with COVID related government support likely to come to an end.
“Despite this, the remortgage market is well placed to thrive in the coming year and, while interest rates may rise, mortgage rates will remain close to the all time lows of 2021.
“We’re also pleased to see that the drive and innovation of UK intermediaries continues to be reflected in the share of distribution across the market, with 80% of the market now being served by this channel.
“However, looking ahead through 2022, we shall continue to press for a coherent, long-term housing strategy from the government, including the promised delivery of hundreds of thousands of new homes for a new generation of homeowners.
“Lenders will continue to develop and engage with schemes to replace the Help to Buy scheme, which comes to an end in 2023, and thus continue to help first-time buyers achieve their dream of home ownership.”
