UK mortgage lending growth is set to continue over the next two years, with lending volumes forecast to reach £350 billion by 2027. Supported by declining interest rates, improving affordability, and more favourable mortgage conditions, the outlook points to renewed confidence among both homebuyers and investors. For those assessing the UK property market forecast for 2026, the signals remain firmly positive.
A Promising Forecast for UK Mortgage Lending Growth:
According to the latest report from the Intermediary Mortgage Lenders Association (IMLA), gross mortgage lending is set to reach £320 billion in 2026 and increase further by 9% to £350 billion in 2027, up from an estimated £288 billion in 2025. This growth is expected to be driven primarily by the housing market, with house purchase lending projected to rise to £205 billion in 2026 and £225 billion in 2027.
As affordability improves, we can expect more people to take the plunge into the property market, encouraged by the falling interest rates. The outlook for buy-to-let properties is equally promising, with buy-to-let lending forecast to rise from £39 billion in 2025 to £44 billion in 2026 and £48 billion in 2027, reflecting strong rental yields and increased demand.
Buy-to-Let Investment Opportunities Remain Strong:
The buy-to-let market is also expected to see significant growth, as more professional landlords enter the market. In fact, buy-to-let house purchase lending is projected to grow to £12 billion in 2026 and £14 billion in 2027.
This growth reflects rising rental demand, tightening supply, and the impact of regulatory changes such as the Renters’ Rights Act, which is contributing to greater tenant mobility. These conditions are creating attractive buy-to-let investment opportunities, particularly for investors focused on long-term income and capital growth.
For overseas investors, including those from the GCC, the UK continues to offer a stable, transparent market with consistent rental demand across major regional cities.
Strong Market Fundamentals Support the UK Property Market Forecast for 2026:
The broader UK property market forecast for 2026 points to steady price growth and increased transaction activity. Average house prices are expected to rise by 3 percent in 2026 and 3.1 percent in 2027, supporting capital appreciation strategies. Alongside these price increases, the number of property transactions is expected to rise, with around 1.25 million transactions in 2026 and 1.32 million in 2027, further indicating healthy market activity.
As affordability improves and interest rates fall, mortgage arrears are projected to continue decreasing, making it easier for both buyers and landlords to manage their investments. This dynamic combination of rising house prices, increased transactions, and falling arrears creates an optimal environment for UK real estate investors.
The Role of Intermediaries in the Market:
Despite changes in the regulatory landscape, intermediaries, such as brokers, will continue to play a vital role in mortgage distribution. IMLA forecasts that around 87% of regulated mortgage lending will still be conducted via the broker channel across 2026 and 2027. Intermediaries will help borrowers and landlords navigate the complexities of affordability, regulation, and product choice, ensuring the best outcomes for both the owner-occupied and buy-to-let markets.
Why This is Good News for Investors:
Rising lending volumes, improving affordability, and resilient rental demand are combining to support a positive outlook for UK real estate. UK mortgage lending growth underpins confidence across the market, while sustained demand continues to create compelling buy-to-let investment opportunities. For overseas investors, particularly those from the GCC, this is a perfect moment to capitalise on the promising returns offered by the UK property market. Whether you’re looking to acquire residential properties in thriving cities like Manchester, Liverpool, and London, or seeking high-yield buy-to-let opportunities, the prospects are bright.
Call to Action:
Interested in exploring UK property investment opportunities? Get in touch with us at Magnate Assets today, and start building your portfolio in one of the world’s most dynamic real estate markets.