The UK outlook is one in every of ‘persevering with challenges’, in line with UK Finance.
In its annual market forecast, the commerce physique for the banking and monetary sector mentioned that every one forms of lending, from home purchases to remortgaging, would fall in 2024.
That is on the again of huge falls in lending volumes in 2023.
Mortgage market slowdown
UK Finance gave up to date projections for lending this yr, which highlighted the extent of the slowdown.
It mentioned that gross lending would whole £226bn, down 28 per cent on 2022.
Lending for home buy is anticipated to have fallen by 23 per cent, remortgaging to a brand new lender by 21 per cent, and buy-to-let buy lending by an enormous 53 per cent to only £8bn.
Inner product transfers are anticipated to have risen 11 per cent to £219 billion.
James Tatch, head of analytics at UK Finance, mentioned: “2023 was a difficult yr for each potential and current mortgage debtors, dealing with affordability pressures from greater rates of interest and the elevated cost-of-living, in addition to home costs nonetheless at elevated ranges relative to revenue. Within the face of those challenges, borrowing for home buy has been constrained.
“On the identical time most current clients seeking to refinance their loans selected to take a product switch with their present lender, the place affordability checks aren’t required.”
There’s additionally been an increase in arrears (30 per cent) and possessions (13 per cent), attributable to price of dwelling and rate of interest pressures.
Regardless of the rise, the whole arrears figures represents solely round one per cent of whole excellent mortgages within the UK.
UK Finance has predicted additional falls in lending subsequent yr.
It has made the next lending predictions:
We’re forecasting the next for 2024:
- Gross lending to fall by an additional 5 per cent to £215bn
- Lending for home buy to fall by an additional eight per cent to £120bn
- Exterior remortgaging exercise to fall by an additional eight per cent to £60bn
- Inner product transfers to fall by eight per cent to £202bn
- Purchase-to-let buy lending to fall by an additional 13 per cent to £7bn
- Arrears to extend to 128,800 circumstances by the tip of 2024
- Possessions to extend by 16 per cent to five,100.
Tatch added: “We count on lending to stay weak in 2024, with a gradual enchancment in affordability mirrored in a modest enhance in exercise ranges in 2025.
“The difficult atmosphere has additionally pushed extra households into mortgage arrears. Nonetheless, the rigorous affordability checks in place since 2014 at the moment are working to make sure that the overwhelming majority of shoppers can nonetheless afford their mortgage funds even with the elevated stress on their funds.
“Though we forecast extra clients will encounter arrears subsequent yr, we count on numbers to peak nicely under ranges seen beforehand.”