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What is Happening in the Mortgage Market?

What is happening in the mortgage market?
what is happening in the mortgage market

The UK mortgage market is heading towards the slowest lending forecast growth over a two-year period in a decade. According to the recent Ernst & Young report, it is expected that in 2023 the net growth will be 1.5% and 2% in 2024, which is significant decline in lending in comparison to previous years.  


What is causing the drop in lending?

Mortgage rates are at the highest point since 2008, causing people to be wary when deciding whether to purchase their first home or move to another.  The reintroduction of Stamp Duty has also increased costs on top of the inflated price of houses after the lockdowns where mortgages spiked with many people taking advantage of the Stamp Duty Holiday often leaving cities to surrounding towns to upgrade their homes.

In addition to the above, an expected weaker labour market, sluggish GDP growth for 2023 and 2024 and the development in the Middle East and Ukraine represents an ongoing downward risk to the forecast at least for the short term.


During the period January to September 2023, the net mortgage lending has averaged £300 million a month in comparison to £5.7 billion per month through the same period in 2022 where mortgage approvals were approximately 40% higher.


Net Monthly Mortgage Lending (£million) January 2022 – September 2023


Looking to the Future

High interest rates and a constantly changing market have caused many prospective house buyers to hold back. With recent news of the Bank of England not raising the base rate for the second consecutive month and inflation starting to steady, lenders are now competing with increasingly lower interest rates showing the housing market’s resilience and steps to slowly bounce back over the coming years.

Dan Cooper, UK Head of Banking and Capital at Ernst & Young, says “With interest rates now expected to peak at a lower level than previously predicted, we should see a gradual improvement in consumer and business confidence over the next two years, leading to greater appetite to borrow.”

In 2025, there is only a slightly greater forecasted growth of 2.8% provided there is a consistent decline in interest rates and inflation throughout 2024 and 2025.


Halifax House Price Index Report

Halifax’s latest house price index has showed that house prices rose by 1.1% increase in October bringing the average house price to £281,974 following the small 0.3% drop through September.  However, looking on an annual basis, house prices are down by 3.2%

Halifax have suggested that First Time Buyer market is holding up better than other areas.  South East has had the sharpest fall.

Kim Kinniard, director of Halifax Mortgages, noted that sellers had a “cautious attitude” towards selling which has reduced the supply in houses for sale. She continued to say “Across the medium-term, with financial markets not anticipating a decline in the Bank of England’s base rate soon, we expect house prices to fall further overall – with a return to growth from 2025”



Regardless of what is happening in the mortgage market if you have a mortgage coming to an end in the next 6 months, you need to start reviewing your options now, in preparation.  With the ever-changing mortgage market, you need to make sure you obtain the most competitive deal available to you. 

Contact our Mortgage Brokers by emailing our team or calling 01628 564631


Please note your mortgage is secured on your property. Your home may be repossessed if you do not keep up repayments on your mortgage.

The information contained within was correct at the time of publication but is subject to change.


Source: Decade-low mortgage growth forecast into 2024 - EY Item Club |  | Halifax for Intermediaries 

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