Mortgage market predictions and forecasts for 2022

interactive investor comments on UK Finance estimates for this year and next.

• UK Finance estimates that gross lending overall will peak this year at £316 billion, up 31% on 2020, then moderate to £281 billion in 2022, before increasing to £313 billion in 2023.
• Total house purchase transactions (including cash purchases) will reach 1.5 million in 2021, some 47% higher than 2020 and, in fact, the highest number since before the Global Financial Crisis. 
• The main driver of lending in 2021 will be for house purchase, (£200 billion, up 53% on 2020), whereas homeowner remortgaging activity will be slightly down on last year at £62 billion. 
• Buy-to-let activity has followed a similar path to the residential sector, with purchase activity increasing to £18 billion, up 83%in 2020. 
• While the 2022 and 2023 gross lending figures will be reductions on the 2021 peak, notably they are higher than the 2020 and 2019 figures and represent a return to more stable levels of activity.

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The stamp duty holiday and cheap mortgage rates have helped kickstart the UK housing market from the Covid malaise, with prices soaring to record highs - further fuelled by strong demand with limited supply, particularly among three and four-bed family homes.

“However, the threat of the new Omicron variant threatens to throw a spanner in the works of the housing market, which has only just got back up to full speed. We are still developing our understanding of the new variant, but if it behaves similar to the Delta variant, we could see a temporary drop off in listings, with sellers opting to wait for greater certainty of the new variant before moving.

“Interest rates are also a factor, but the general consensus is the base rate will be nudged slightly upwards from 0.1% to 0.25% in the near future, meaning that while mortgages rates will rise accordingly, they will remain cheap by historic standards.

“But the sentiment remains that the only way is up for interest rates. As such, anyone looking to remortgage in the near future might want to consider securing a deal now. Mortgage deals are often valid for a number of months, and it is not too early to start looking for the best deals now.”