Buy To Let lending is set to fall back this year, after a hectic 2021.

That’s the forecast from the Intermediary Mortgage Lenders Association, which says it predicts BTL lending will fall back from £44.5 billion in 2021, to £38 billion in 2022 and £37 billion in 2023. 

Whilst buy to let landlords took advantage of the stamp duty holiday last year, IMLA predicts that higher interest rates and broadly flat house prices will dampen buy to let house purchase demand in 2022.

The same trend will be mirrored elsewhere across the housing market.

IMLA estimates that the total value of housing transactions reached a record of nearly £370 billion in 2021. However, the association’s 2022 New Normal report predicts a decrease in gross mortgage lending to £275 billion this year, with a further fall to £265 billion in 2023.

The report, which makes a series of predictions about the mortgage market over the coming year, observes that the remortgage market will be stronger in 2022, reaching £89 billion, compared to £82 billion in 2021. 

This is a result of lenders prioritising house purchase lending during last year’s stamp duty holiday, with lower predicted house purchase volumes going forward encouraging lenders to focus more heavily on the remortgage market.

Kate Davies, executive director of IMLA, says: “It should come as no surprise that 2022 is set to be more subdued, especially with Covid related government support likely to come to an end. Despite this, the remortgage market is well placed to thrive in the coming year and, while interest rates may rise, mortgage rates will remain close to the all time lows of 2021.

“Looking ahead through 2022, we shall continue to press for a coherent, long-term housing strategy from the government, including the promised delivery of hundreds of thousands of new homes for a new generation of homeowners. 

“Lenders will continue to develop and engage with schemes to replace the Help to Buy scheme, which comes to an end in 2023, and thus continue to help first-time buyers achieve their dream of home ownership.”