At Adverse.Online we like to keep up to date with how the Uk mortgage market is doing and in turn offer some insight into how the wider economic circumstances impact the full UK mortgage market, so that our customers and readers can stay informed about how these market signals trickle down into the bad credit mortgage market.
So with the IMLA predicting healthy lending growth for 2025, greater intermediary business and more remortgaging in the prime mortgage market, one would hope that any improvements to the prime market, will indeed triple down into the adverse market.
- Intermediaries share of mortgage business to rise to 89%
- Gross mortgage lending to increase 16% to £275 billion
- Remortgaging cost to rise 13% to £38 billion
- Arrears to carry on falling to 0.94% of loan balances
The latest IMLA report, The New ‘Normal’—Prospects for 2025 and 2026, outlines a cautiously optimistic outlook for the mortgage market. It reviews activity in 2024 and provides detailed forecasts for both residential and buy-to-let sectors over the next two years.
Key highlights include:
- Intermediary Dominance Continues: The share of mortgage business handled by intermediaries is set to rise from 87% in 2024 to 89% in 2025, reaching 91% by 2026.
- Rising Gross Lending: Total gross mortgage lending is projected to grow from £237.5 billion in 2024 to £275 billion in 2025 (up 16%), then to £295 billion in 2026 (a further 11% increase). This includes:
- House purchase lending of £177 billion in 2025 and £190 billion in 2026
- Remortgaging volumes of £88 billion and £94 billion, respectively
- A Clearer Economic Picture: Post-Truss, economic stability is gradually returning. The era of ultra-low interest rates is over, but rates have peaked and are expected to stabilize between 3% and 4%.
- Affordability Set to Improve: The average new borrower currently spends 15.5% of income on mortgage interest—a figure expected to fall modestly as rates decline. Around 1.8 million borrowers coming off fixed-rate deals in 2025 will benefit.
- Buy-to-Let Outlook: Lending in the buy-to-let market is predicted to rise 14% to £38 billion in 2025 and then to £42 billion in 2026 (up 11%). Falling rates and rising rents (driven by supply shortages) will support this growth, though regulatory changes and tax hikes may dampen new landlord purchases.
- Arrears Declining: Despite earlier concerns, mortgage arrears over 2.5% began falling in Q3 2024. They are expected to decline from 0.98% at the end of 2024 to 0.94% in 2025 and 0.85% in 2026.
Kate Davies, IMLA Executive Director, commented:
“After a turbulent period, we’re seeing welcome signs of stability. The market is adjusting to the ‘new normal’ of higher—but manageable—interest rates. In 2025, we expect modest growth, a stronger remortgaging market, and continued reliance on brokers to help borrowers navigate their options.
“Buy-to-let landlords face ongoing challenges, but falling rates and rising rents may offer some relief. Meanwhile, the drop in arrears shows lenders’ robust underwriting and willingness to support borrowers in difficulty.
“With intermediary market share set to exceed 90% in 2026, advisers will play an increasingly central role in helping clients secure the most suitable mortgage solutions.”
IMLA Predicts Healthy Lending Growth for 2025
With news that the IMLA predicts healthy lending growth for 2025, one would hope that the positive market signals experienced in the prime UK mortgage market will be felt in the bad credit mortgage market and that rates and affordability will improve across the sector.
The Intermediary Mortgage Lenders Association (IMLA) is the trade association that represents mortgage lenders who lend to UK consumers and businesses via the broker channel. Its membership of 53 banks, building societies and specialist lenders include 18 of the 20 largest UK mortgage lenders (measured by gross lending) and account for about 90% of mortgage lending (91.6% of balances and 92.8% of gross lending).
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