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Mortgages - state of the market and expectations for next year

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 30. November 2022

Looking to speak to mortgage brokers about current state of mortgage market and what their expectations are for next year. 

  1. Has pricing started to come down since the mini Budget? 
  2. Do you think this trend will continue into next year? 
  3. When do you think pricing may normalise?
  4. What is purchase/remortgage activity like currently? Are there any areas you expect to grow and fall in the coming months?
  5. What advice would you give to customers looking to buy now, wait and see till next year or go for something now? 

8 responses from the Newspage community

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Gary BoakesVerified
Director at Verve Financial
My worry is that the recent reduction in rates is just a false dawn and all we are seeing is the markets stabilising after the fiasco of the Liz Truss mini-Budget. Rates are still considerably higher now than they were in September and with the Bank of England expected to raise the base rate to 4.5-5.5% over the next six months, it will be interesting to see how swap rates and lenders react. However, I think it will be a while before rates normalise. There will still be an appetite for lending as always next year, but after a very profitable two years lenders are going to have to squeeze their margins to get buyers confident again. The remortgage market next year is going to be very important and one where I believe we will have to look after our customers and ensure that we are working with them constantly in the 6-month lead up to their rate expiring. For a lot of brokers, this will be the first time that they have experienced rising interest rates and telling people that their mortgage payments are going to increase by 40%-50% is going to be challenging and soul-destroying in some instances. My best tip for people whose mortgage is due for renewal in the next year is to engage with a mortgage adviser as early as you can. Don't leave it to the last minute as your options are going to be limited and it could prove to be more costly. Knowing what your mortgage payments are likely to be in six months will give you time to prepare and look at cost savings if needed.
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Samuel Mather-HolgateVerified
Independent Financial Adviser at Mather and Murray Financial
House prices are starting to fall but there's plenty of room for them to tumble further. I expect falls over 20% in the housing market from now until the end of Spring. Interest rates have still got further to rise, although they shouldn't, and the market won't bottom out until rates start receding and there is no sign the Bank of England have any appetite for this just yet. Buyers should sit on their wallets until the crash has happened or else they will be sitting on losses and possibly negative equity if they are using a mortgage.
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Justin MoyVerified
Managing Director at EHF Mortgages
Mortgage rates have slowly been reducing over the past six weeks or so. We have seen fixed rates in particular now below 5%, both for short and long term deals, and tracker margins have also narrowed. There is definately some space for more fixed rate reductions, and I suspect this will happen when lenders set their targets for 2023. Many lenders will want to hit January with a bang. I would expect sub-4% rates for lower loan-to-value mortgages, as lenders take the opportunity to attract low risk lending. I think the whole industry would love to see mortgage rates settle as soon as possible. Mortgage holders won't commit to a deal when rates shoot up, nor when they believe a cheaper rate is just around the corner. We all need that stabilty of pricing, as it allows us all to function again. Purchase mortgages have already been affected, and for 2023 the volume of first-time buyers will be more conservative. Homemovers will take the opportunity to port cheaper deals, keeping their costs lower than average, and lenders will want to attract low loan-to-value business. My personal advice is to keep looking, as people will still need to sell for a multitude of reasons, and that ideal property might come to market. Whilst mortgage rates are higher, it's really important to look at all the costs of homeownership. At the right price, it will generally be the right decision to buy.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
We have seen a surprising increase in purchase enquires over the past couple of weeks but buyers are negotiating hard. We may still see a correction of up to 10% going into 2023. Lloyds Bank Group recently announced that they were speaking to the regulator about measures to support struggling customers. If other lenders follow with similar packages, it will certainly cushion the fall as the number of people looking to sell decreases.
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Craig FishVerified
Director at Lodestone Mortgages
Interestingly enough, I'm not starting to see any down valuations, but that may be because the applicants and/or vendors have already reduced their offers or asking price. Having spoken to some local agents, though, they are saying that offers are being reduced by at least 10% at present, and more by property investors. I feel that this is likely to continue until at least the middle of next year and very possibly beyond. I would anticipate pricing to stabilise by the latter end of next year, but I guess this all depends on how quickly vendors and agents come to terms with the fact that prices have dropped. The quicker they do, the quicker the market will return to normal. We are still handling some purchase enquiries, but I would say around 85% of our enquiries are from people remortgaging, and I expect this to increase in the coming weeks and months. I recently saw a statistic saying that half of all mortgage holders have a fixed rate ending in the next 2 years, so I imagine that us brokers will be rather busy. If a buyer approaches us with less than a 10% deposit, we are having a very frank conversation with them, because there would be nothing worse than starting on their housing journey only to end up in negative equity in a year or so. I think we owe our clients a duty of care to forewarn them of the potential scenarios and pitfalls.
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Elliott BensonVerified
Owner at Sett Mortgages
I have not seen a fall in house prices as yet, only a reduced amount of properties going to best and final offers. There are, however, far fewer clients having to bid over the odds for property now. I think this will continue into next year with house prices stabilising and a return to seasonal norms. I think if fixed rates also continue to fall into the new year, this will be particularly good news for first-time buyers as they will not have to offer thousands over asking price for a property and the peace of mind of a fixed rate. With fixed rates falling, it will still remain more attractive to buy than to pay rent. I am still seeing a lot of purchase activity with remortgage demand now falling slightly given the panic after the mini-Budget has dissipated. I would say there is never necessarily a bad time to get on the property ladder providing you have taken advice and it is affordable for you.
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Rhys SchofieldVerified
Brand Director at Peak Mortgages and Protection
All the doom and gloom is getting pretty tiresome. The reputable experts seem to be pointing towards a house price correction of around 10% next year, which feels about right to us at the coalface. When prices have gone up by an unsustainable nigh on 20% in the past two years, though, it's hardly apocalyptic for most people. If anything, it's probably good for the market. Properties will come back into reach for first-time buyers and if you're a next stepper selling up to move on who sells your house for 10% less, the one you want to buy may also be 10% less. You've not actually lost out in that case.
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Graham CoxVerified
Director at Bridging Hub
All the available evidence suggests house prices are already starting to fall. But we won't see it reflected in Land Registry figures until early next year. In my view, large drops in property prices are likely in 2023 possibly between 10% and 20%, with further smaller falls in 2024. By exactly how much will depend on how soon the Ukraine war finishes, and by how much the Bank of England needs to raise interest rates to put a lid on inflation. On the whole, lower house prices are excellent news, especially for the younger generation who've been priced out of owning a home of their own. Unfortunately, some recent buyers will find themselves in negative equity, and possibly for a few years until prices pick up again.