The latest data and analysis from The Intermediary Mortgage Lenders Association, has predicted a tough couple of years ahead for the UK buy-to-let sector as landlords feel the effects of the 2015 regulatory changes.
The association warned that gross buy-to-let lending will fall 6% to £36 billion this year and £35 billion the year after, with landlords purchasing 59,000 rental properties in the coming year, down from 66,000 in 2018 resulting in a "lacklustre" BTL sector in 2019 and 2020.
IMLA advised that any significant jump in mortgage lending over 2019 is "unlikely" as the market is set to remain steady in the face of wider economic uncertainty.
The report also found that 2019 gross mortgage lending will total £269 billion, broadly unchanged from 2018’s level. And, while remortgaging has been the main driver of increased lending over the past few years, IMLA says remortgaging will also be broadly stable at £102 billion in 2019 as the popularity of product transfers continues to grow.
Given the flat picture in the housing market and the underlying shift from remortgage activity to product transfers as seen in 2018, IMLA expects a slight dip in both lending and remortgaging in 2020.
While the market will remain largely flat, IMLA believes that lending via intermediaries will increase as more borrowers seek expert advice to navigate a tough market.
Mortgage brokers undertook 74% of mortgage lending by volume in 2018, the highest share on record, and IMLA expects this trend to continue. The report notes that intermediary lending will rise to £169 billion in 2019, and £171 billion in 2020, as the share of lending introduced by intermediaries rises to 75% in 2019 and 76% by 2020.
Kate Davies, executive director at IMLA commented: “We have had a robust recovery in lending volumes since the low of 2010, and the continuing combination of steady inflation and low unemployment should underpin the housing and mortgage markets in 2019 and 2020. Intermediary-driven lending continues to go from strength-to-strength as more people than ever turn to a broker to find the most suitable mortgage.
But the mortgage market isn’t fully functioning as one would expect. Record low rates and historically low loan-to-value ratios, coupled with cash and household equity being injected into the housing stock, are more usually associated with a continuing period of recession.
These are symptoms of a market that has failed to support first-time buyers and those moving up the housing ladder in the way it did for previous generations. Although low mortgage rates are supporting borrower affordability, high house prices and regulatory constraints on lending make it harder for borrowers to move onto the housing ladder.
With the mortgage market now following a gentle trajectory, it is a good time for policy-makers and regulators to reassess the costs and benefits of the present regulatory structure, recognising that the impact on those locked out of homeownership can be considerable and lasting.”