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Home Finance Mortgage lending to plummet 15% but re-financing supports market

Mortgage lending to plummet 15% but re-financing supports market

by uma


  • Overall mortgage lending is expected to fall 15% – a return to pre-pandemic levels.
  • Property transactions are predicted to fall by 21% next year.
  • Strong demand for refinancing as around 1.8 million fixed rate mortgage deals are scheduled to end in 2023.
  • Some borrowers may find remortgaging options more limited on the open market though there will be strong availability of internal product transfers
  • Product transfers could hit an estimated £212 billion next year, compared with an estimated £197 billion in 2022.
  • There will be an estimated 98,500 households in arrears next year. This represents around 1% of outstanding mortgages.

UK Finance has published its forecast for the mortgage market UK Finance Mortgage Market Forecasts 2023-2024.pdf

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“We are going to see some big shifts in the mortgage market next year as mortgage lending plummets in the face of the cost-of-living crisis. However, if we put this into context these figures come off the back of a period of extremely buoyant market activity as buyers rushed to buy bigger properties and take advantage of the stamp duty holiday. What we are seeing is more like a return to pre-pandemic levels.

However, it is clear the market will face real headwinds as affordability is hit by rising costs making people a bit more hesitant to take that next step on the housing ladder – UK Finance predict property transactions to fall by more than a fifth over the course of the year. People coming off fixed rate deals may also find their repayments on the rise prompting more belt tightening over the coming months. 

The good news is that people on the hunt for a new deal should still find they can transfer products internally if they can’t get a deal on the open market and while the number of households in arrears is expected to get close to the 100,000 mark, this represents around 1% of outstanding mortgages and so a relatively small proportion historically. The important thing is that anyone having trouble meeting their mortgage payments engages with their lender as soon as possible to get a plan in place.”