According to EY ITEM Club, mortgage lending is expected to grow by 1.6% this year, up from -0.1% in 2023.
EY predicts that if interest rates continue to fall gradually as expected, mortgage lending will continue to grow over the next year, increasing by 2.6% in 2025 and 3.3% in 2026. 
This suggests that UK households' appetite for borrowing is starting to pick up as housing affordability improves following interest rate cuts in August and November.
Other data shows that UK mortgage amortization rates are expected to rise slightly from 0.002% in 2023 to 0.004% in 2024.
However, due to low unemployment and household income growth, this proportion is projected to decline to 0.002% in 2025 and 0.003% in 2026.
Dan Cooper, head of banking and capital markets at EY UK, said: “The acceleration in loan growth is welcome news for UK banks, which recently reported better-than-expected third quarter results.” . Expectations that loan defaults will stabilize are also positive, which should further boost banks' balance sheets. ”
Anna Anthony, EY UK Financial Services Managing Partner, added: “The UK macroeconomic environment has been very challenging in recent years, but now appears to be turning around.”
“Although the full economic response to the Autumn Budget and US elections remains to be seen, signs of economic recovery are deepening and there is increasing optimism among businesses and households. The outlook for UK bank lending is brighter than it has been in recent years.''
