The Intermediary Mortgage Lenders Association (IMLA) is forecasting rising mortgage lending volumes through 2026 and 2027, underpinned by falling interest rates, improving affordability and a more accommodating regulatory environment.
In its latest report, The new ‘normal’ – prospects for 2026 and 2027, the trade body predicts that gross mortgage lending will increase to £320bn in 2026, before rising a further 9% to £350bn in 2027. This compares with an estimated £288bn in 2025.
House purchase lending is expected to be the main engine of growth. IMLA forecasts that purchase lending will reach £205bn in 2026 and £225bn in 2027, reflecting stronger transaction levels as affordability improves.
Remortgaging activity is also projected to pick up, rising to £103bn in 2026 and £110bn in 2027, as borrowers respond to lower interest rates.
BUY-TO-LET RECOVERY TO CONTINUE
The report suggests that the recovery in the buy-to-let market will continue over the forecast period. Gross buy-to-let lending is expected to increase from an estimated £39bn in 2025 to £44bn in 2026 and £48bn in 2027.
IMLA attributes this growth to a combination of rising rental yields and increased market churn, which it says has been exacerbated by the Renters Rights Act. Buy-to-let house purchase lending is forecast to rise to £12bn in 2026 and £14bn in 2027, as amateur landlords continue to exit the sector and are increasingly replaced by more professional operators.
HOUSE PRICES AND ARREARS
The housing market is expected to remain one of the strongest-performing parts of the UK economy. Average house prices are forecast to rise by 3.0% in 2026 and 3.1% in 2027, while transaction volumes are projected to increase to 1.25 million and 1.32 million respectively.
Mortgage arrears are expected to continue their downward trend over the period, reflecting improved affordability and the completion of the upward repricing of existing mortgage books.
Despite ongoing regulatory change, intermediaries are forecast to retain their dominant position in mortgage distribution. IMLA expects that around 87% of regulated mortgage lending will continue to be conducted through the broker channel across both 2026 and 2027.
Kate Davies, executive director of IMLA, said: “The housing and mortgage markets continue to play a vital role in supporting the wider UK economy, and our forecasts show that they are set to remain a source of resilience and growth through 2026 and 2027.
“Falling interest rates, rising transaction levels and a recovering buy-to-let market all point to a more positive outlook for lending activity.
“As the market grows and becomes more complex, the importance of intermediary advice is greater than ever. Intermediaries play a crucial role in helping borrowers and landlords navigate affordability, regulation and product choice, while supporting good outcomes across both the owner-occupied and buy-to-let sectors.”
