2023: The Year Ahead – An Expert View

Thursday, January 12, 2023

The Year Ahead – An Expert View

The new year brings a time for reflection, taking stock and looking ahead. There’s no denying that there were some unprecedented trends and circumstances last year. Whether it was managing the cost of living crisis or the unpredictability of the mortgage market, the role of mortgage brokers in helping those looking to buy a home has been proven to be more vital than ever. As we move into 2023, a broker’s view of the market and their ability to despense expert advice means they might be engaging with homebuyers who may not have worked with brokers before. We think the next twelve months will hold some interesting opportunities.

In a recently recorded discussion , our Chief Commercial Officer, Steve Griffiths, sat down with Keith Church, the Head of Economic Modelling at 4most to chat about the year we’ve had and what lies ahead. Here’s a few highlights of their conversation;

Plan for the worst, but there is hope for the economy

After the widespread uncertainty which happened at the time of the Autumn mini-budget, we can work towards a clearer future, now the economic picture has settled and we have a more concise view of what’s on the horizon. The data indicates that the UK is set to face a recession – Keith called out it is likely that we are already in one.

While this might be a cause for initial concern, the UK economy is in a much stronger position than it was prior to the 2008 financial crash. It is therefore unlikely that this recession will be as quite as deep and severe as what we saw over a decade ago.

A downturn in house prices is underway - it’s set to continue

A number of stats have demonstrated the drop in house prices towards the end of 2022. Nationwide reported a 1.4% drop in house prices across November and Halifax recorded the same metric as being down 2.3%. With buyer interest falling in recent weeks, the house value metrics that previously rose throughout the year have shown signs of slowing and starting to turn downward.

Buyer interest is currently low as house prices continue to fall for the longest period since during the 2008 recession, reflecting the low levels of house purchase activity seen in recent months.

In the current environment, the typical mortgage repayment on an average house has risen to roughly 26% of the income of the homebuyer. To restore a more manageable proportion in the neighbourhood of 20%, house prices would need to drop by 25% if mortgage rates don’t fall. If the economic conditions we’ve seen in the latter part of 2022 continue into the new year, prices are expected to fall somewhere between 5% and 10%.

It's also worth noting from the BTL landlord perspective when house prices fall as well as interest rates there is a point where BTL investors will start to ramp up purchasing as property returns will be more attractive than savings rates. This is a trend for brokers to keep an eye out for in the coming twelve months, especially with the clients who operate within the BTL space.

The view from TML on 2023

While a lot of different macro-economic factors have to be considered in the context of what the mortgage broker market will look like in 2023, Steve Griffiths is on hand to provide his own thoughts on what opportunities the next 12 months hold in the context of his conversation with Keith Church:

“The main opportunity is that as lending becomes more challenging, for example as affordability hurdles become more difficult in line with higher rates and cost of living, brokers can access lenders with specialist criteria like TML that can understand income on a more granular level to help customers achieve their borrowing objectives.

Another important point for 2023 is that for many years, a lot of customers have just selected a product transfer at the end of their fixed rate term as wasn’t worth looking around. The evolving landscape means that there is more of an incentive to look at a full re-mortgages rather than a PT further funds to restructure debts etc. This is another area where broker advice becomes invaluable across the coming year.”

We are here to support brokers and house buyers this new year

As we look to the coming year, Keith Church praises the condition of the UK economy in its ability to withstand some of the hardships we’ve seen in recent months. The stronger financial foundations ensured that we’re not facing a 2008-style downturn.

The key themes are set to emerge further throughout 2023 include the following:

  • The increase in the cost of living is set to slow, hopefully putting less strain on the disposable incomes of UK households
  • Energy bills have hit the pockets of people looking to save. Government support announced in Autumn will tide many over until April, but we’ll need a view on what support comes after
  • With interest rates set to reach somewhere in the region of 4.5%-5%, there is a chance that house prices could fall even further than the initially predicted 10%

We can’t deny that there is a degree of uncertainty in the immediate future, but this is why anyone in the process of buying a home will value a mortgage broker’s advice more than ever. As a broker, now is the time to start the new year by actively engaging with your client base to grow your scope of opportunities over the next 12 months. 

If you want to find out more about how we can help your clients in navigating the mortgage market of 2023, get in touch with us today!


Please note article content was accurate at time of publishing