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Daily Mirror - What will happen to house prices and mortgage rates next year

ended 15. December 2022

A journalist on the Daily Mirror would like to get some commentary from mortgage brokers on what will happen to house prices and mortgage rates next year. 

Keep your responses nice and tight! :-)

14 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
I don't expect to see a functioning market for the first half of the year. Interest rates will have knocked confidence and sellers will have to start reducing prices and this will be slow to happen. Prices won't bottom out until the Bank of England pivots and this will only happen once inflation falls out of the system. I expect the central bank to start reducing rates in July, a couple of months after inflation has returned to near normal levels. The state of the economy will mean it won't be a strong rebound though. With slow growth returning but high employment and shell shocked workers, it won't be until the end of 2023 that there is a functioning sector again. Housing prices will be a rollercoaster and fall nearly 20% before receiving to finish the year modestly down.
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Imran Hussain
Director at Harmony Financial Services
The Bank Of England has announced a 50bps increase on the base rate, which is now 3.5%; this will almost certainly make next year a challenging market for sellers as buyers will be restricted with how much they can offer with rising living costs and rising mortgage rates all within 12 months I expect house price growth to cool or almost certainly halt in many parts of the country as buyers won't offer over asking price or even at asking price with the average mortgage rates at around 5-6% for 5-year fix rates and the current state of our overall economy and borrowers taking most of the brunt since Trussonmics there will be opportunities for first-time buyers but sellers must be realistic in their selling price as we have already seen surveyors be cautious in the valuations for the past few months.
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Riz Malik
Independent Financial Adviser at R3 Wealth
House prices will drop next year and we are already seeing this start to happen. Those who were trying to sell their property in 2022 but were holding out for a better offer are going to be disappointed. However, even though the base rate has increased, I predict a price war between mortgage lenders who will be desperately competing for new business by cutting their margins.
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Justin Moy
Managing Director at EHF Mortgages
With many of the economic indicators showing a slowdown in our economy, we may be closer to finding that Base Rate peak - with some members of the MPC recommending no increase this time, this could be a positive sign that will give us all some heart for 2023. Mortgage rates will continue to improve, settling on an broad average of 3-4%, but the speed of improvement may come quicker in the new year, as lenders set new targets for 2023, and the improvements in the economy start to filter through.
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Craig Fish
Director at Lodestone Mortgages
It's widely expected that the house price declines we are now witnessing will continue long into next year. I suspect we will see drops of around 10%. The BOE base rate is likely to move in the opposite direction to house prices, and likely stabilize at 4.5% before reducing in the latter half of 2023. Hopefully, lenders are going to drop their interest rates as quickly as the UK take down their Christmas trees, triggering a rate war, as they start to eat into their hefty lending targets.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
The Bank of England has officially increased base rate by 50 basis points to 3.5%, impacting millions across the country, with SVRs and 2- and 5-year fixed rates all expected to increase. As rates increase, the amount one can borrow to purchase a property decreases. Put simply, many buyers can no longer meet the asking price, forcing anyone wanting to sell to have to cut prices. Whilst this may concern those homeowners who are on variable rate mortgages, the effect on fixed rate products may not be so drastic. I believe some lenders have priced future rate increases into their current products. We are seeing current 5-year fixed mortgages between 5-6%. Whilst we may see some increase, I do not expect the full burden to fall on borrowers. Those on a fixed rate mortgage that expires next year will see an average increase of £3,000 p/a.
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Gary Boakes
Director at Verve Financial
Mortgage rates are going to depend on how quickly we manage inflation, the recent rate reductions will only continue if the lenders decide to take a hit on their margins. The current rate reductions are as a result of the mini budget and rates are where we would have expected them to be with a base rate of 3.5%.
House prices will fall but probably back to 2021 prices, so just expect last year increase to be wiped out this year.
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Ashley Thomas
Director at Magni Finance
In an ideal world, the rates will reduce and the house prices will stay level or increase. The reality is that fixed rates will probably go down but house prices may slightly drop in the short term next year.
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Lea Karasavvas
Managing Director at Prolific Mortgage Finance
The panic of soaring base rate rises for 2023 has diminished with most economists suggesting a peak of between 4 and 4.5%. Whilst we have seen another Base Rate increase to 3.5% in December, this was very much expected and priced in by most lenders. Swaps have steadily reduced since the first mini-budget and as we enter 2023, lender pipelines will diminish and create an appetite to lend more aggressively which I would suggest will trigger a price war and prove favourable for borrowers. Whilst I do not envisage we will see rates as low as pre-budget, I would expect this competition for market share to benefit the borrowers and expect fixed money to reduce in 2023.

Landlords will be further punished however as higher rates have resulted in less profit and as landlords consolidate, more supply and reduced demand will reduce price
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Graham Cox
Director at Bridging Hub
I think property prices could easily fall 15-20% in 2023. Values have only risen so high off the back of dirt-cheap interest rates. With the base rate now 3.5 per cent and fixed rate mortgage rates around 5 per cent, current house prices are unaffordable unless you're a cash buyer. A full-blown house price crash has already started in my opinion.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
At present (and this is a very dynamic market, so it could all change very quickly) the general view seems to be a small reduction in the house prices as a reduction in the number of buyers allows for more negotiation on house prices, maybe a 5-10% reduction, which walks back some of the record-breaking increases seen over the past two years. Fixed rates are likely to hover around the mark they are now, but variable rates are potentially going to see further increases in 2023 if inflation is slow to fall, maybe another 0.5% on Bank of England base rate in total, but in several smaller increases across the year.
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Oliver Cotterell
Director at Windsor Hill Mortgages and Cotterell & Cotterell Commercial Finance
The general consensus is that property values and interest rates will likely drop in 2023. We are already seeing far less competition for purchases, properties staying on the market for longer, and inevitably more lenders are issuing down valuations during the mortgage application process. You may ask how lenders rates could be dropping when we have just seen the Bank Of England base rate increase again to 3.5%, put simply, there is more confidence in the market again with a more stable prime minister, rising strength in the £ and finally the site of inflation dropping slightly in November. Regarding house prices there was always going to be some form of correction following the Covid hikes, however with the new laws on EPC requirements for rental properties and higher interest rates there may well be more properties entering the market!
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Matthew Jackson
Director at Mint FS
Broadly speaking i would expect fixed rates to continue to soften slightly and settle between just under 4% and 5% for the majority of 2023. Lenders will of course set targets for mortgage borrowing early in the year and i would suspect we will see a raft of exclusive products / limited avaliability products priced competitively in the first 3 months of the year.

A suspected further 0.25% increase in Bank of England Base Rate in January should mean that trackers and discounted rates will be priced more competitively which will attract HNW and financially savvy borrowers.

House prices are forecast to drop on or around 10% in 2023 before moving forward again - however this is obviously a national average and in high demand areas there will be little to no discernable difference in pricing.
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Rob Gill
Managing Director at Altura Mortgage Finance
We expect mortgage rates to fall further as fixed rates are still at least 0.5% higher than before the notorious mini-budget. This should help ensure only a modest fall in house prices of 7%-8% next year. And, as inflation recedes throughout next year, the Bank of England may even cut base rate in the face of the much expected recession that's forecast to extend into 2024.