"We expect more first-time buyers over the next two years, helped in part by competitive mortgage rates and government housing schemes."
In its Mortgage Market Forecast, UK Finance says its prediction relates to the resilience in the jobs market and wider economy, but also because of the competitive nature of the mortgage market, with interest rates close to historic lows.
It says homeowner remortgage activity and first-time buyer numbers have performed better than it had expected over the course of 2017, helped by government schemes, good credit availability, and competitive mortgage rates.
UK Finance expects to see a continued recovery in first-time buyer numbers, though at a slower rate than seen over the last few years.
Data shows that homemover activity has also performed a little better than expected, but is still only likely to match levels over the past three years. UK Finance predicts that homemover activity will remain at this level over the next two years.
Property transactions are also expected to be flat over the next two years, in part a result of the economic uncertainty.
Transactions have recovered somewhat over the course of 2017 helped by first-time buyer numbers, but this recovery only brings activity levels back to where they have been over the last few years.
Buy-to-let activity has been weaker than expected a year ago, with "activity back in 2012 territory and looking unlikely to recover in 2018 or 2019".
Mohammad Jamei, Senior Economist, UK Finance commented: “We are slightly more optimistic about the next two years than we were a year ago. We expect more first-time buyers over the next two years, helped in part by competitive mortgage rates and government housing schemes. Home movers numbers have recovered a little in 2017, but look set to remain flat over 2018 and 2019, as they have benefitted less from government support and have been largely left to fend for themselves. The number of home owners remortgaging with a new lender has grown strongly in 2017, and our expectation is for this to continue over the medium term.
“Regulatory and tax changes are amongst several factors that are reducing confidence in the buy-to-let market. This has led to subdued house purchase activity by landlords since the middle of 2016 and we expect more of the same over the next two years.
“Housing market activity on the whole has recovered somewhat over the last 12 months helped by first-time buyers, but this recovery only brings activity levels back to where they have been since 2014. Looking ahead, we expect activity to continue flat over the next two years, in part a result of economic uncertainty.”
