What’s in Store for the Mortgage Market 2023?

Before we take a look forward into the mortgage market 2023 let’s take a look back at the housing market in 2022, how it performed and how it will influence performance in 2023.

The housing market in 2022 has been something of a rollercoaster ride, but not just because we have seen nine interest rate rises since the beginning fo the year. The disastrous mini-budget held in the Autumn resulted in chaos in the financial markets as it became clear that most of the cuts in that budget were uncosted and largely unaffordable. 

Almost all of those cuts were subsequently withdrawn, resulting in Sterling falling to record lows. Mortgage lending suffered too as lenders withdrew many of their deals and replaced them with products around 1.5 percentage points higher.

The Bank of England Base Rate of Interest now sits at 3.5% which has impacted the mortgage market and activity levels in the housing market, but it is the mini budget that has caused the greatest turmoil.

Inflation remains high at 10.7%, caused by rising fuel and food prices as a result of the war in Ukraine. 

The Mortgage Market 2023

Financial market conditions are expected to improve during 2023, and inflation is expected to fall dramatically during the year. It is, however, expected to remain significantly above the Bank of England’s 2% target. The B of E Base Rate is expected to continue rising, peaking at 4.5% and not the anticipated 6% to tackle inflation. 

Two and five-year fixed-rate mortgages have settled somewhat too, falling from their peak 6.5% interest rate seen during October.

As a result of slowly returning stability, falling inflation, and the rate of increase in interest rates, analysts expect that mortgage rates won’t jump significantly during 2023¹. Many lenders have already priced in the expected increases, especially on new deals.

Analysts also expect mortgage rates to continue to fall during the year. That makes for a complex set of considerations in the mortgage market 2023.

The Housing Market 2023

Many lenders and analysts are predicting house prices falling in 2023 between 8% and 10%, driven by a slowing market due to the cost of living crisis, and readjustment due to the affordability caused by rising interest rates and the cost of mortgages.²

Some improvements in the availability of property have added to slowing increases in house prices.

By the end of the year UK house prices are expected to stabilise, and looking forward to 2024 begins to rise, albeit only by an anticipated 1% for the year.³

While higher interest rates are expected from the Bank of England, the overall picture, while confusing, appears to be stable, and with costs beginning to fall, a soft landing next year isn’t exactly on the cards. The good news is that the housing market crash that some pundits were advocating is a long way from happening. 

What’s in Store for Borrowers?

We’ve looked at the Bank of England Base Rate and its continuing, if slowing, rises expected in 2023, and returning stability to the costs of mortgages, especially new borrowing. Alongside this the expected fall in house prices could have the overall effect of reducing borrowing costs from late 2022 for savvy borrowers.

So what are the options that borrowers should consider in 2023? Fixed rate mortgages may be unattractive right now as interest rates remain relatively high. As interest rates fall and lenders improve their rates this could change as borrowers seek to manage their monthly repayments so that they can budget effectively. Tracker mortgages may be a good option now, tracking below the base rate. 

The mortgage market is a complex blend of factors affecting lenders, and the impact that those factors have on available products. Taking professional advice is a must for borrowers seeking a new mortgage or remortgage during 2023. 

Experienced mortgage brokers will take the time to learn what the circumstances and needs of their clients are, and combine this knowledge with access to a broad range of mortgage products and knowledge of market conditions both current and anticipated.

Here at Liddle Perrett, we work closely with you to understand your circumstances and financial needs, and match that information with the most suitable mortgage products for you and your family. 

We’ll help you to understand the risks and challenges that borrowers will face in the coming years so that you have the peace of mind that what you borrow today will be affordable for you and your family tomorrow. 

For advice and guidance on your residential buy to let mortgages drop a member of our team a line, and we can take a look at your personal circumstances and help you find the best mortgage and protection products to suit your needs. 


¹ https://www.forbes.com/uk/advisor/mortgages/mortgage-outlook-2023/

² Halifax (8%), Savills Residential Property Market Forecast (10%) 

³ Savills Residential Property Market Forecast 

The information provided in this article was correct at the time of publication (January 2023)

Liddle Perrett Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority.


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