Gross mortgage lending is set to reach its highest level since 2007 despite Brexit, says the Intermediary Mortgage Lenders Association.
But its latest annual forecast document says that the market continues to be challenged by a combination of a shortage of properties, very low levels of turnover and obstacles to both first-time buyers and so-called second-steppers.
The report says that Britain’s ageing population will have “profound ramifications” because many older owners will have low or no mortgages and will not want to move home - with consequential knock-on effects for second steppers in need of accommodation appropriate for growing families.
IMLA’s analysis shows that the proportion of funding for new house purchases that came via mortgages fell from 52 per cent in 2006 to 41 per cent in 2016 with only a slight rise to 41.5 per cent in 2017.
Moreover, the aggregate loan-to-value ratio of the housing market has now fallen to below pre-financial crisis levels at 26 per cent, as homeowners’ increasing equity reduces the role of mortgage debt in the overall housing market.
IMLA also says the average UK homeowner is now 57 - up from 52 back in 1996. “This increase is far more rapid than the rate of ageing across the UK population as a whole. In 2016, 76 per cent of all owner-occupiers were aged 45 or above, compared to 62 per cent in 1996” the report says.
As a result of so many older un-mortgaged owners, the typical UK household now moves once every 19.2 years, compared to once every 7.4 years when housing transactions peaked back in 1988.
IMLA says the number of first time buyers has increased in recent years to reach 366,000 in 2017, buoyed by factors including cash inheritances, the Bank of Mum and Dad helping to supplement deposits, and government schemes such as Help to Buy.
“However, homeowners looking to make subsequent moves are feeling the effects of an illiquid market” it warns.
Despite there being 377,200 ‘second steppers’ in 2017, this overall number is down 42 per cent since 2007.