2014 will be the second successive year of significant recovery in the UK mortgage market, with gross lending expected to increase by 20%. The rate of growth will moderate beyond 2014, but will ensure that gross advances rise to 250.5bn by 2018, a level not seen since 2008.
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What factors will drive the supply of mortgage finance?
What factors will affect consumer demand for mortgages?
Which sectors offer the best prospects and opportunities for expansion over the next few years?
Although consumer confidence has been improving, this will be tempered by continuing pressures on wages and household budgets. The increasing house price-earnings ratio will also add to concerns around affordability. In addition, the lack of an immediate prospect of a rise in the base rate will continue to stifle demand for remortgaging.
The MMR has been implemented without undue fuss and has not slowed down activity. The Help to Buy scheme has improved the availability of high LTV mortgages, which has benefited first-time buyers. Furthermore, falling rates of arrears and possessions are helping to strengthen balance sheets, leading to enhanced lending capacities.
Self-build and custom build will benefit from government initiatives to boost this sector. In particular, the introduction of "Right to Build" legislation will force local authorities to find sites for all consumers who have registered an interest in securing plots of land to build on.