House purchase lending is expected to be the main driver of growth, reaching £205 billion in 2026 and £225 billion in 2027, while remortgaging is forecast to rise to £103 billion and £110 billion respectively as interest rates fall and affordability improves

The Intermediary Mortgage Lenders Association (IMLA) is forecasting continued growth in the UK housing and mortgage markets through 2026 and 2027, with rising lending volumes supported by falling interest rates, improving affordability and easing mortgage regulations.

In its latest report, IMLA forecasts that gross mortgage lending will increase to £320 billion in 2026, rising a further 9% to £350 billion in 2027, up from an estimated £288 billion in 2025.

House purchase lending is expected to be the main driver of growth, reaching £205 billion in 2026 and £225 billion in 2027, while remortgaging is forecast to rise to £103 billion and £110 billion respectively as interest rates fall and affordability improves.

IMLA also expects the recovery in the buy-to-let market to continue. Gross buy-to-let lending is forecast to rise from an estimated £39 billion in 2025 to £44 billion in 2026 and £48 billion in 2027, supported by rising rental yields and increased market churn exacerbated by the Renters Rights Act.

Buy-to-let house purchase lending is projected to grow to £12 billion in 2026 and £14 billion in 2027, 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, with average house prices forecast to rise by 3.0% in 2026 and 3.1% in 2027, alongside an increase in transactions to 1.25 million and 1.32 million respectively. Mortgage arrears are projected to continue falling over the period, reflecting improved affordability and the completion of the upward repricing of existing mortgage books.

Despite ongoing market and regulatory change, intermediaries are expected to remain at the heart of mortgage distribution. IMLA forecasts that around 87% of regulated mortgage lending will continue to be conducted via the broker channel across 2026 and 2027.

Kate Davies, executive director of IMLA, says: 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.

Davies adds: Falling interest rates, rising transaction levels and a recovering buy-to-let market all point to a more positive outlook for lending activity.