Gross mortgage lending is forecast to reach £320bn in 2026, with rising lending volumes supported by falling interest rates, improving affordability and easing mortgage regulations.
Furthermore, around 87% of regulated mortgage lending will continue to be conducted through the broker channel across 2026 and 2027, according to the Intermediary Mortgage Lenders Association’s (IMLA’s) forecasts.
House purchase lending is expected to be the main driver of mortgage growth next year, projected to reach £205bn in 2026.
The trade body’s forecasts are more optimistic than those released by UK Finance earlier this month, which estimated gross lending to reach £300bn next year, while lending for 2025 is expected to be £288bn.
Remortgage lending, according to IMLA, is forecast to rise to £103bn.
IMLA also expects the recovery in the buy-to-let (BTL) market to continue.
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Gross BTL lending is forecast to rise from an estimated £39bn in 2025 to £44bn in 2026, supported by rising rental yields and increased market churn exacerbated by the Renters’ Rights Act.
BTL house purchase lending, meanwhile, is projected to grow to £12bn in 2026 as more amateur landlords exit the market, often to be replaced with more professional operators.
The housing market is expected to remain one of the strongest performing areas of the UK economy. Average house prices are forecast to rise by 3% in 2026 and 3.1% in 2027, alongside an increase in transactions to 1.25 million and 1.32 million respectively.
IMLA’s house price predictions are on the upper end of Halifax’s forecasts, which sit between 1% and 3%. Nationwide, meanwhile, is forecasting that house price growth next year will stay between 2% and 4%.
IMLA expects mortgage arrears to continue falling over the period, reflecting improved affordability and the completion of the upward repricing of existing mortgage books.
2027 at a glance
IMLA expects gross mortgage lending to continue its upward trajectory, rising a further 9% to reach £350bn. House purchase lending is forecast to reach £225bn, while remortgaging activity is projected to increase further to £110bn.
Overall BTL lending is also predicted to exceed the 2026 forecast, climbing to £48bn in 2027. Within that, house purchase lending is expected to rise to £14bn.
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.”
