The Intermediary Mortgage Lenders Association (IMLA) is forecasting a 14% surge in buy to let lending in 2025, reaching £38 billion, followed by an 11% increase to £42 billion in 2026.
This growth is attributed to improved affordability for landlords as interest rates decline while rents continue to climb due to the continuing imbalance between supply and demand in the private rented sector (PRS).
IMAL points to the stamp duty increase for additional properties to reduce slightly the flow of new landlord purchases.
There are also fears around the Renters’ Rights Bill may prompt some landlords to sell up, deepening the supply imbalance and forcing rents up further.
Kate Davies, IMLA’s executive director, said: “Buy to let landlords continue to face the challenge of increased regulation and higher taxes, and will be looking to run their property businesses as efficiently as possible.”
Rise in gross mortgage lending
The IMLA report, ‘The new ‘normal’ – prospects for 2025 and 2026′, analyses the mortgage market and predicts a rise in gross mortgage lending from £237.5 billion in 2024 to £275 billion in 2025.
That will be followed by an 11% increase to £295 billion in 2026.
This growth will be fuelled by lower interest rates and a surge in remortgaging demand as affordability pressures ease.
However, IMLA’s report makes clear that the ‘new normal’ will not see a return to the ultra-low-interest-rate era of the past decade.
Instead, interest rates are expected to stabilise between 3% and 4%.
Mortgage interest payments
Despite this, the average new borrower currently allocates approximately 15.5% of their income to mortgage interest payments.
This figure is projected to fall slightly as rates drop to being a ‘modest’ improving affordability and creating more remortgaging opportunities.
IMLA expects 70% of the growth in gross mortgage lending to stem from house purchases, while remortgage activity is anticipated to rebound by 13% to £88 billion.
The share of mortgage business conducted through intermediaries is poised to continue its upward trajectory, rising from 87% in 2024 to 89% in 2025 and reaching 91% in 2026 – a historic milestone for the market.
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
