Economists Upgrade UK Bank Lending Forecast Expecting Growth in 2023

According to a group of leading economists, UK banks are set to increase their lending activities as the country's economy manages to dodge the worst recession scenarios and the housing market displays signs of recovery.

The EY ITEM Club UK Bank Lending Forecast has revised its previous estimate of a 0.1% decline in total UK bank loans for this year to a projected 1.2% increase or a net gain of £29bn. This adjustment is attributed to the lower-than-expected energy bills, falling inflation, and a resilient jobs market, which are expected to support a 0.2% growth in UK GDP in 2023 and drive increased consumer and business borrowing.

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UK Mortgage Lending Expected to Grow 1.2% in 2023

Furthermore, the EY forecast indicates that net mortgage lending is also expected to grow by 1.2% this year, up from the 0.4% estimate in the February forecast.

Anna Anthony, EY's UK Financial Services Managing Partner, notes that the UK is still on the road to economic recovery, with a more optimistic outlook than a few months ago, and the predicted recession now likely to be avoided. She adds that the fall in energy prices has contributed to an increase in consumer and business confidence, which is positive news for the industry.

EY economists suggest that the ongoing banking crisis in the US has had a limited impact on the UK's highly capitalised lenders.

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Positive Outlook for the UK Property Market

The upgraded UK Bank Lending Forecast and the positive outlook for the UK economy are good signs for investment in the real estate market. The increase in net mortgage lending, driven by the projected growth in consumer and business borrowing, suggests a potentially strong demand for property investment in the coming year.

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Opportunity for Buy-to-Let Property Investment

Furthermore, the signs of recovery in the UK housing market also indicate growth opportunity for investors. As property prices and sales activity improve, investors are able to capitalise on the market's upward momentum and achieve a higher return on investment.

The resilient jobs market and falling inflation also suggest a more stable economic environment, which could provide additional confidence to the UK property market. As the UK economy continues to recover, the potential for real estate investment to generate steady returns will attract more investors to the market.

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