Refinancing is expected to increase with huge numbers of fixed rate deals due to end
Overall mortgage lending will fall 15% next year, returning to pre-pandemic levels, UK Finance has predicted.
The trade body for the UK banking and financial services sector has today published its mortgage market forecast for 2023 and 2024, anticipating a slowdown in the mortgage market.
Lending for house purchase mortgages, in particular, is forecasted to fall 23% due to cost-of-living pressures and rising interest rates placing pressure on affordability, while new lending to buy-to-let landlords is predicted to fall 27% in 2023.
Property transactions are expected to fall by 21% next year too, from around 1.2 million in 2022 to one million in 2023.
Refinancing, however, is expected to increase with around 1.8 million fixed rate mortgage deals scheduled to end next year. UK Finance forecasted that around £212 billion of product transfers will take place next year, compared with an estimated £197 billion in 2022.
It is also anticipated that the number of households in arrears will reach 98,500 next year, representing around 1% of outstanding mortgages, which is still low by historic standards.
“As we look ahead, the mortgage market is expected to enter a period of relative weakness from next year as house prices, the cost-of-living and interest rate pressures put a brake on new demand,” James Tatch, principal of data and research at UK Finance, said.
“The high level of activity during the 2021 Stamp Duty holiday means that a large number of borrowers are due to refinance next year, pushing up the expected value of refinancing in 2023. The pressures being seen on household finances could mean that some customers have fewer options. However, there is wide availability of product transfers.”
Tatch also encouraged customers to speak to a whole-of-market mortgage adviser to discuss the options best suited to their circumstances.
“As always, customers who find themselves in difficulty should speak to their lender at an early stage, as the industry stands ready to help with a range of forbearance options that can be tailored to best suit individual customers’ circumstances,” he said.
