The Intermediary Mortgage Lenders Association (IMLA) has predicted a rise in gross mortgage lending to £285bn in 2021, according to the trade body’s latest report.

This is the highest level of mortgage lending since 2007 and comes due to a swift return to household spending as COVID-19 lockdown restrictions were eased earlier in the year.

The figure is a slight increase on the initially forecast £283bn from IMLA’s New Normal report in January.

IMLA’s predictions follow data which show a surge in mortgage lending, stimulated by the strength of the housing market. During the first five months of 2021, lending for house purchase was not only 87% above the same period the previous year, but 51% above the same period in 2019. The trade body added that while remortgage activity has been weaker, the number of product transfers has risen to record levels.

In light of the high levels of market activity brought forward by the stamp duty holiday, however, the trade body has also revised its forecast for gross lending in 2022 – reducing it slightly from £286bn to £280bn. The report also forecasts that house prices will be broadly flat in the second half of 2021 but will rise 1.6% in 2022.

IMLA executive director, Kate Davies, commented: “Following a difficult period in the wake of the coronavirus crisis, it is very encouraging to see yet another positive prediction for the remainder of 2021.

“Our findings forecast that 2021 will see the highest level of mortgage lending since 2007 and, with a combination of government support helping to underpin new purchases and a bumper year for product maturities, we expect this high demand to continue.

“However, with the stamp duty holiday soon coming to an end, and the Help to Buy scheme due to conclude in 2023, there is still a need for a coherent, long-term housing strategy from the government that embraces the public as well as the private sectors – and delivers a market that meets Britain’s housing needs for the decades to come.”

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