Gross mortgage lending in the U.K. could increase at an average compound annual growth rate of 7.06% over the next five years, according to a recent Timetric report. The fastest growth rate (11.7%) will likely be set in 2017, due to an uptick in home prices across the region.
Timetric expect gross lending to total GBP218.6 billion in 2015. It may then rise to GBP241.6 billion in 2016, and could reach GBP286.8 billion in 2019.
“Rising interest rates, combined with reduced growth in the UK housing market, is set to stunt increases somewhat from the 15% and 22% rates seen in 2014 and 2013, respectively,” says Ben Carey-Evans, analyst at Timetric. But, “improving economic conditions, particularly the continuation of improving real wages, should see gross lending rising at a steady rate up to 2019.”
Meanwhile, outstanding mortgage balances are expected to grow at a slower pace, registering a compound annual growth rate of 1.42%. Still, repayments are likely to increase as stronger economic growth prompts a rise in the official BoE policy rate.
As such, balances outstanding are forecast to reach GBP1.33 trillion by the end of 2015, and to reach GBP1.39 trillion by 2019.
Carey-Evans adds, “Growth in the mortgage market will be supported by rising house prices. [That will] necessitate larger-value loans, and regional variations in house prices will continue to influence the distribution of mortgage lending.”
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