The growth of the British mortgage loans will be more than double this year, an increase of 1.5% in 2024 to 3.1% in 2025, according to data from the EY articles.
EY suggests that the increase arises from falling interest rates and rising consumer confidence, which stimulated the activity of the housing market in the second half of 2024.
Moreover, it is expected that gradual interest rates are predicted this year, including consumer confidence and appetite for borrowing.
With rising house prices and high mortgage interest rates, the growth of mortgage loans is expected to remain stable in the coming years, with a net fever at 3.2% in 2026 and 3.6% in 2027.
In general, the economic recovery of the UK is slower than expected, but growth will build steadily over the next two years, with the GDP predicting by 1% in 2025 and 1.6% in 2026.
EY says that this will implement to the banking sector, because the interest rates continue to fall and the appetite for borrowing strengthens over time.
As a result, the total British bank loans are expected to rise to 3.7% this year, an increase of 2.3% in 2024, while it predicts that it will increase to 4.1% in 2027 in 2026 and 4.3%.
In the meantime, standard rates have been set to stabilize due to falling loan costs and healthy balances.
EY predicts the depreciation of the British mortgages to 0.001% in 2025, from 0.004% in 2024. This is when the loan percentages fall before they rise marginal to 0.002% in 2026 and 2027.
EY UK and leader of the financial services of Ireland, Martina Keane, says: “The gradual economic recovery of the UK reinforces confidence and translates into more appetite to borrow from British banks.”
“Looking at the coming year, if the interest rates are further reduced as expected, the loan costs must fall, the capacity for household expenses will grow and a stronger levels of mortgage loans should return after two years of little to no growth.”
“However, optimism must be measured. We start 2025 with increased geopolitical tensions and a sense of uncertainty about the impact of upcoming British tax increases, with a very real downward risk for market confidence and the general prospects for the growth of the loan. “
EY UK head of bank and capital markets Dan Cooper adds: “There is no doubt that the macro -economic climate of recent years has been difficult for British companies and households, and this has an impact on the banks that support them.”
“Looking at the coming year, the increasingly positive prospects for loans and the prospect of relatively low standard rates are welcome news for British banks and their customers.”
“Although it is important to remember that these growth rates are still a way of record heights of recent years, this prediction must give a boost to the balance sheets of banks and some breathing space to concentrate on implementing broader strategic priorities such as Transformation and embrace new technologies. “