Record mortgage affordability is keeping the housing market afloat, but current housing policy needs to be revised to meet homeownership targets according to a new report by the Intermediary Mortgage Lenders Association (IMLA).

The third of IMLA's annual reports - The new 'normal' prospects for 2016: is the march back to a sustainable market on track? - examines trends in the mortgage and housing markets, and the potential impacts of recent policy changes, in order to assess the strength of the post-recession recovery.

Overall, it forecasts a continuing recovery in mortgage lending during 2016 and 2017, with a particular pickup in lending for house purchases by owner-occupiers from an estimated £142bn in 2015 to £155bn in 2016 and £169bn in 2017.

However, reviewing 2015 activity, the report finds that even though mortgage affordability has hit its highest level ever, with buyers spending a record low 8.6% of their income on interest by Q3 2015 and even first time buyers spending only 9.7% by November, first-time buyer numbers have fallen marginally year-on-year, suggesting the government may need to revisit housing policy to successfully increase owner-occupation levels.