Remortgagers driving forecasted lending increase in 2022 as homebuyer demand drops

The latest market analysis by mortgage experts, Revolution Brokers, has revealed that despite recent turbulence following a string of base rate increases, the total sum of lending secured across the UK property market is on course to sit two per cent higher than it did in 2021. 

Based on an analysis of lending data from the Bank of England, the research by Revolution Brokers forecasts that total lending secured on dwellings across the UK market is set to hit £314.6bn in 2022. 

This is by far the highest level seen during the pandemic property market boom and 17% higher versus the total lent in 2019 - equating to £45.6bn more lent to individuals in a single year versus the pre-pandemic market. 

It’s also some 2% more than the total sum lent in 2021, a jump of over £6.1bn in the last year.

However, there are early signs that the market uncertainty of recent weeks will leave an early mark on the sector. When breaking the market down specifically by those purchasing homes, the figures show that the total sum lent in 2022 is actually set to fall by 9.1% annually to £193.9bn - a £35.7bn reduction versus 2021. 

Despite this, the estimated total sum lent to homebuyers in 2022 remains on course to sit 22.6% higher than it did in 2019.

In contrast, the sum lent to those looking to remortgage is predicted to increase by a notable 29.5% on an annual basis, reaching a total of £107bn in 2022. This total sits just 6% higher than the total seen in 2019 prior to the pandemic market boom. 

Founding Director of Revolution Brokers, Almas Uddin, commented:

“Despite the turbulence of the current economic landscape, the overall health of the mortgage sector remains strong and we’re on course to see the largest total level of lending since 2019.

However, when dissecting the market by the various types of lending, it’s clear that the pendulum is starting to swing in the opposite direction to that seen for much of the pandemic market boom. 

Previously, it was new homebuyers driving market performance, with those already on the ladder having very little reason to remortgage before their initial terms had expired. 

What we’re now seeing is a decline in lending on new home purchases as a string of base rate hikes have pushed the cost of borrowing upwards. At the same time, there’s been a lift in activity from those remortgaging, keen to lock in a favourable rate before mortgage rates increase any further. 

While we’ve certainly seen the beginning of the end where the pandemic market boom is concerned, it’s not yet clear to what extent the market will now stutter.”