Wednesday, February 12, 2025
HomeMortgageThere’s hope for another prediction-beating BTL market this year – Cox

There’s hope for another prediction-beating BTL market this year – Cox



If a week is a long time in politics, then a year is certainly a long time in terms of predicting what the UK mortgage market might achieve over the next 12 months.

It seems a long time ago, but you might not have forgotten just how downbeat the predictions were for 2024 12 months ago, particularly in terms of gross mortgage lending across the entire market, but also for the buy-to-let (BTL) sector specifically. 

I don’t want to put the Intermediary Mortgage Lenders Association (IMLA) under the spotlight, because it has an excellent mortgage and lending review and preview each year, which I would encourage all stakeholders to look at, but it was certainly a downbeat read for all back then. 

The trade association’s gross mortgage lending prediction for 2024 was just £205bn, with a slight improvement deemed possible in 2025 at £210bn. For the BTL sector, it was also fairly bleak, suggesting we would see £27bn of lending in our product space in 2024, and again a slight improvement in 2025 up to £29bn. 

 

Hard to anticipate the path of the BTL market 

Now, as mentioned above, there is no slur intended here at all. Anyone who even attempts such predictions and forecasts has my respect because, after all, there are so many unknowns in doing so and you’re likely to be hoisted by your own petard should you get it wrong.


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For example, who might have predicted everything that happened to influence mortgage lending during the past 12 months? Certainly, if you lay them all out in front of you, you might well come to the conclusion that a £205bn/£27bn gross/BTL lending prediction wouldn’t have been too far off the mark. 

However, even with elections and Budgets and rate changes aplenty, I think we sometimes all underestimate the resilience of our market, the growing (almost total) influence of the adviser and advice, and the understandable and fundamental ambition (or need) for people to both own their own property, or to invest in property, or indeed to do both. 

Plus, of course, there are some market fundamentals that are simply unshakeable, including supply-side shortages, or rental demand, or reactions to rates falling, or shifting and less damaging affordability constraints, etc, that drive activity and ultimately move consumers towards advisers and advisers to business completions with lenders. 

 

An active market 

Hence, we get to the end of the year and, despite there being plenty of evidence and sentiment at the start of 2024 to suggest lending would dip potentially quite sharply, what we actually find is that all of the above, and then some, contributes to an increase in activity and business. 

So, instead of £205bn of lending, we get to £237.5bn, with almost all of that increase down to increases in purchase business. In the BTL space, instead of £27bn of lending, we get to £33.2bn, with existing landlords recognising market fundamentals that require more private rental sector property and hence still being very keen to purchase, plus of course a significant and increased slug of remortgage activity. 

Not forgetting that often derided cohort of landlord borrowers that many had deemed extinct but that is also making a real return – namely, the first-time landlord/investor, who also continues to understand the allure and attractiveness of property investment in a marketplace where tenant demand remains incredibly high, especially against the backdrop of a lower supply of properties. 

 

Still good returns in BTL 

Our most recent Rental Barometer shows this in full effect, with almost every single region in which we lend across England and Wales showing a positive increase in rental yield over the last 12 months. If you understand these facts, and you also see lower mortgage rates making affordability easier – with perhaps further falls to come – then there need be little wonder why activity has not just held up but improved. 

It should leave us all with not just a positive sense of what was achieved in 2024, but also an extremely hopeful sense of what is possible in the next couple of years. IMLA suggests gross lending will hit £275bn this year and £295bn in 2026; that BTL lending will now hit £38bn in 2025 and £42bn in 2026.

With the utmost respect, I hope they are wrong again, and I hope that what was clearly on show during 2024 continues to reveal itself even more strongly over the course of the next 12-24 months. Certainly, I believe in BTL there is growing confidence and a much more positive outlook that suggests those predictions can be beaten again, and by a healthy margin. 

It is up to all of us to ensure that business is written or rewritten, and that we can end this year in an even better frame of mind than we start. 





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