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Home buyers beware! mortgage lending to fall 15% in 2023

UK Finance predicts that mortgage lending will drop 15 percent next year.

This would mean a fall in gross mortgage lending from £322 billion to £275 billion in 2023, and to £253 billion in 2024.

Total home loans in the UK are expected to fall from £171bn to £131bn next year, then to £122bn in 2024. And for buy-to-let (BTL), from £18bn to £13bn to £11bn across the same time frame.

The trade body predicts that the value of residential remortgages will be £82bn in 2022, increasing to £89bn in 2023, then dropping to £81bn in 2024.

In the meantime, the BTL sector will see remortgage value drop from £38 billion to £30 billion and then £28 billion across the same time frame.

UK Finance predicts that residential property transactions will decrease by 21% next year, from 1.27 million to just over 1 million, falling further in 2024 to just under 1 million.

Mortgage arrears are expected to rise as well. Total first charge mortgages in arrears of over 2.5% of the outstanding balance is expected to rise from 80,100 in 2015 to 98,500 next year and then 110,300 in 2024.

It's expected that next year, the number of properties taken into possession by the government will rise to 7,300. The following year, it will be 9,700.

James Tatch, principle of UK Finance, explains that: “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."

"The large number of borrowers who took advantage of the Stamp Duty holiday in 2021 means that a large number are due to refinance in 2023, which will push up the expected value of refinancing."

"Some customers may be forced to make different purchasing decisions because of their household finances."

John Phillips, national operations director for Just Mortgages, comments: “Next year will be a challenging one for brokers. To succeed in this market, brokers will have to work harder than ever before.”

"Mortgage brokers have survived worse economic times, and we will continue to serve our customers. We need to help borrowers understand that rates of 4% and 5% are the new normal, and household budgets should be adjusted accordingly. Lenders still want to lend and they offer good products that let you buy or keep your home.

"In 2023, brokers are advised to diversify to keep up with rising standards in the mortgage market. They should look into equity release, commercial and overseas mortgages because these sectors will be lucrative for them.

"Brokers can also earn extra income by simply ensuring that their existing and new clients have appropriate protection needs.

"Next year can be a great opportunity for brokers to succeed. They simply need to seize it."


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