The Intermediary Mortgage Lenders Association (Imla) has stated that it expects this year to be quieter after “unprecedented” action in 2021 in its latest report, ‘The New Normal’.

Imla says that while gross lending hit £304bn in 2021, it sees this falling to £275bn this year, along with a drop in the total value of housing transactions, which came to £370bn in 2021.

The report also forecasts gross lending in 2023 falling further to £265bn.

Within this, Imla expects that, due to higher interest rates and “broadly” flat house prices reducing demand, gross lending in the buy-to-let market, which came to £44.5bn in 2021, will fall to £38bn this year and £37bn in 2023.

Regarding remortgaging, Imla says that lending in 2022 will exceed that seen in 2021, going from £82bn to £89bn, “a result of lenders prioritising house purchase lending during last year’s stamp duty holiday, with lower predicted house purchase volumes going forward encouraging lenders to focus more heavily on the remortgage market.”

The association also says that higher interest rates and inflation rises shouldn’t have too large an effect on mortgage rates.

It explains that the 50-year yield on UK gilts being at 1% signals a decline in long term interest rates, “which should ensure that longer term (5 year plus) fixed rate mortgage rates do not rise too much.”

“Secondly,” the report adds, “the market continues to exhibit a shortage of supply – near record low levels – which will underpin house prices and prevent a significant fall in aggregate prices.”

Imla executive director Kate Davies says: “It should come as no surprise that 2022 is set to be more subdued [than 2021], 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, 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.”