- 8 February 2021
- Posted by: mikey0809
- Categories: Mortgage, Property
Suppressed demand and the temporary stamp duty holiday helped drive the activity in the mortgage market during 2020, reported by EY Item Club.
The financial service firms have predicted that this boom may start to lose steam this year.
Tightening of lending conditions for high loan to value (LTV) mortgages, along with the end of the stamp duty cut could take demand off the boil.
However, if the successful rollout of the vaccination programme allows the economy to reopen, lending may pick up again later in 2021, aided by continued low interest rates, the report said.
EY also pointed to the new EU-UK partnership as removing some uncertainty which was previously weighing on the housing market.
As a result, the report forecasts a 2.3 per cent rise in mortgage lending in 2021, down from three per cent growth in 2020, and an increase of 2.6 per cent is forecast for 2022.
Anna Anthony, managing partner, UK financial services, Ernst & Young, said: “A tightening of lending conditions for high loan to value mortgages and the stamp duty holiday ending in April means the mortgage market is showing signs of cooling off, despite ending 2020 on a strong note.
“Slower growth in overall lending and pressure on net interest margins from low interest rates will both impact banks’ profitability… Whilst this is a difficult environment to operate in, banks entered the pandemic well capitalised, and are positioned to weather the storm.”