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Expectations for 2023

Journalist: Jake Carter, Mortgage Introducer

ended 10. January 2023

I am seeking to understand the views of experts on their expectations for the mortgage market in 2023.

What do you expect from rates this year?

Do you believe house prices will continue to fall? If so, to what end?

What government support could be introduced to assist the mortgage market through 2023?

6 responses from the Newspage community

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Mike Staton
Director at Staton Mortgages
2023 will be the year of uncertainty. Fixed rates have already started to drop and will probably settle at the 4.5% mark come june, i also expect to see one more increase in the Base rate which will more than likely take it to 4%. An increase in adverse mortgages as people who struggled during the covid lockdown come to the end of their fixed periods. I dont think the base rate increases have had the impact that was expected on inflation, they are causing further misery and financial hardship. Anybody with half a brain can see that it just isnt working, i say lower the base rate and let inflation drop naturally, it is the lesser of 2 evils but one that would take further financial stress away from the public. The final thing I expect to see is a house price drop of around 5%
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Rates will continue to increase, but at a more gradual rate than seen in 2022, until late Spring. The Bank of England base rate will top out at 4.25% and then it will sit and linger there for much longer than necessary, keeping downward pressure on house prices. The housing market will suffer and I expect to see localised falls of up to 25%. By the end of the year the market will have recovered and will be down by 10%.

The government needs to intervene as the system has been broken for decades. Not enough new affordable houses are being built. Given the chaos in Downing Street I don't expect to see much meaningful intervention. Maybe a general election for 2023?
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Kylie-Ann Gatecliffe
Director at KAG Financial
My prediction was that we would see a slow start to the year, however based on the amount of enquiries we have had over the festive period - there are a lot of people still looking to get on the ladder in 2023. We have seen lenders reducing many mortgage rates for the past few weeks, and I think even with another base rate increase lenders will be trying their best to remain competitive. I do believe house prices will reduce by around 10% this year, which the media is painting a picture of this being absolute doom and gloom - however I see this as simply a correction to take us back to how the market looked pre pandemic. Which will be welcomed by a lot of first time buyers who have struggled to get on the market due to rising prices and bidding wars.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
As per our Annual Research Report, we are expecting further increases in interest rates up to 5%, until we reach a point at which the BoE has inflation firmly under control.

We expect home prices to fall throughout 2023 as demand slumps due to several factors, including but not limited to, a drop in mortgage approvals and sellers being forced to settle below their asking prices. Affordability will continue to be a driving factor in the fall of residential property prices in the coming months. Across the UK we predict a -10.98% drop over the year with the largest fall in London of -15.40% over the year.

I also believe that the market needs a natural correction and therefore should be allowed to operate independently of government support for the most part. Although some consideration is needed for first time buyers.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
House prices are not so much falling, as returning to the levels we saw pre-pandemic, so more of a correction and probably no bad thing in the grand scheme of things, despite fixed rates that have continued to soften, but I think we will very soon be reaching their new base level, they are certainly not going to continue down toward where they were a year or so ago, especially given that the Bank of England is widely expected to need to raise the base rate further to curb inflation. The Help-To-Buy scheme comes to a final close in 2023, but with no direct replacement yet being announced, so I would expect pressure for something to be launched - the question is; does the government have the bandwidth currently to deal with that, on top of all the other current priorities?
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Graham Cox
Director at Bridging Hub
Right now, it looks like the Bank of England base rate may increase to about 4%. I suspect inflation will fall quite rapidly over the next few months, providing wiggle room for the cental bank to reduce it to perhaps 3% by year end.

But who knows, there's a lot of uncertainty still. What if Putin starts to get back on top in Ukraine? Or inflation proves stubborn?

Either way, with fixed rate mortgages in the 4-5.5% range thoughout 2023, large house price falls seem inevitable, and long overdue. Ten per cent at least, with 15-20 per cent quite possible.