Industry expects steady growth in housing activity and loan volumes as rates ease
The Intermediary Mortgage Lenders Association (IMLA) has projected a gradual expansion of the UK housing and mortgage markets over 2026 and 2027, underpinned by lower interest rates, improved affordability and a more accommodating regulatory backdrop.
In its latest market outlook, The new ‘normal’ – prospects for 2026 and 2027, the trade body expects gross mortgage lending to rise to £320 billion in 2026 and then to £350 billion in 2027, compared with an estimated £288 billion in 2025.
House purchase is forecast to be the main contributor to this increase, with lending for purchases anticipated to reach £205 billion in 2026 and £225 billion the following year.
Remortgage activity, which has helped the mortgage market rebound this year, is also expected to edge higher as borrowing costs fall and affordability pressures ease. IMLA predicts remortgage volumes of £103 billion in 2026 and £110 billion in 2027.
In addition, the association of mortgage lenders anticipates a continued upturn in buy-to-let. Gross buy-to-let advances are forecast to climb from an estimated £39 billion in 2025 to £44 billion in 2026 and £48 billion in 2027.
The outlook cites stronger rental yields and greater churn in the sector, in part linked to the Renters’ Rights Act. Buy-to-let purchase lending is projected to reach £12 billion in 2026 and £14 billion in 2027, with some smaller landlords expected to exit and be replaced by more professional operators.
IMLA expects housing to remain one of the more resilient areas of the UK economy over the forecast period. Average property prices are projected to increase by 3% in 2026 and 3.1% in 2027, alongside a rise in transactions to 1.25 million and 1.32 million respectively. Mortgage arrears are expected to continue to decline as affordability improves and the repricing of existing mortgage books runs its course.
Despite ongoing adjustments to regulation and market structure, the intermediary channel is forecast to retain its dominant position in distribution. IMLA estimates that around 87% of regulated mortgage lending will continue to be written through brokers across 2026 and 2027.
“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,” said Kate Davies (pictured right), executive director at the Intermediary Mortgage Lenders Association.
“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.”
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