New BTL lending for house purchases is forecast to fall by 13% in 2024 to £7bn said a UK Finance report.
According to UK Finance’s predictions, new BTL purchase lending is set to fall again in 2024 after it was reported to have decreased 53% year on year in 2023 to £8bn, while remortgaging dropped by 47%.
UK Finance said while the coming year will prove to be challenging one for the finance market, affordability issues look as though they are now peaking.
Despite this, the report cited issues such as cost and rate pressures, as well as taxation and regulatory headwinds throughout 2003 as contributing factors to the sharp declines.
UK Finance went on to note that while the coming year is expected to bring smaller contractions, smaller landlords will still be particularly challenged due to inability to spread costs across portfolios.
Gross lending was also predicted to drop by a further 5% to £215bn.
James Tatch, head of analytics at UK Finance, said: “2023 was a challenging year for both prospective and existing mortgage borrowers, facing affordability pressures from higher interest rates and the increased cost-of-living, as well as house prices still at elevated levels relative to income.
“With these pressures unlikely to ease significantly in the short term, we expect lending to remain weak in 2024, with a gradual improvement in affordability reflected in a modest increase in activity levels in 2025.”
