Sales to decline by 23% in weaker mortgage market

The cost of living crisis and rising interest rates will lead to a decline in property transactions and mortgage lending next year as the market weakens, banks have suggested.

Banking trade body UK Finance has released forecasts for 2023, predicting that the number of property sales will fall 21% from 1.2m this year to 1m over the next 12 months.
It suggests the value of lending to homeowners will drop by 23% and lending to landlords will fall 27%.

Despite the anticipated fall in activity, UK Finance said the UK has a strong mortgage and housing market which will remain competitive.

It suggests there will be strong demand for refinancing as around 1.8m fixed rate mortgage deals are scheduled to end in 2023.

The forecasts also suggest that arrears and repossessions could rise gradually but will remain below pre-pandemic levels.

James Tatch, principal in the data and research team at UK Finance, said: "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.

“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 - we would encourage customers to speak to a whole of market mortgage adviser to discuss the options best suited to their circumstances.

"As always, any 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."