Looking ahead: Reasons to be cheerful about the market in 2023

Bob Hunt

Bob Hunt

8 December 2023
As the year draws to a close, it's natural to think about what might be coming over the horizon in 2023. As is usual within the mortgage market, there's currently plenty of potential data to support both a half-glass full or half-glass empty view of what's likely coming our way.

Whatever your view, there is much that we can all do to shape what kind of year we will have. Regardless of all the noise around potential house price falls, a declining number of potential purchases, and issues of ongoing affordability, product access and rate levels, this market still presents all kinds of opportunities.

Over the past few weeks, I’ve been conversations with all kinds of mortgage market stakeholders – lenders in particular seem somewhat divided in terms of their positivity for 2023, often dependent on which sector ‘territories’ they sit in.

I think we’re all acutely aware the ‘Mini Budget’ and the weeks thereafter were very worrying for the market, and specifically for those would-be or existing borrowers who were looking at their mortgage options within that particular time period.

It will not have been an easy watch or process for them, however, without professional advisers and the advice they provided, many would have opted for ‘quick fixes’ that would have ended up with them being worse off than those offered and secured through an adviser.

That period was undoubtedly difficult, but I truly believe they cemented the pivotal role of the mortgage adviser and there will be vast swathes of borrowers now who will never want to make a mortgage decision of any kind without securing advice first. Not only has advisers’ reputation been enhanced but the whole existence of advice, what it can deliver and the protections it provides will now be known by so many more individuals.  

Bringing the picture more up to date, it’s obvious to all that we have moved on relatively swiftly from those Autumn months – thank goodness. We’re not back to pre-‘Mini Budget’ pricing or indeed product availability, but I believe we are getting there, and it’s my view that the start of the new year will hasten this progress.

In between now and the end of 2022, we have a few pivotal points to look out for. On the 14th December we will find out the next inflation rate – even if it is up on November’s 11.1%, my view is this is likely to be a high point and from here, inflation will start to fall.

On the next day, the 15th December, we will hear from the Monetary Policy Committee, and again the expectation is that it may raise Bank Base Rate (BBR) again. However, as you will know, the anticipation of what BBR might rise to next year has already come down, and as inflation does fall, the requirement to keep on increasing BBR will dampen.

Plus of course, we have swap rates now averaging below where they were just before the ‘Mini Budget’ and over the past few weeks have seen a steady stream of lenders cutting pricing and returning to product spaces and sectors. Again, I expect this to continue at a heightened pace once the new year begins.

Overall, I sense a little circumspection from some commentators about what is achievable for the mortgage market in 2023. Forecasts are currently ranging between £225bn and £285bn for UK gross mortgage lending, with potentially another £275bn of residential retention business coming up, plus £20bn of buy-to-let.

That is still a considerable amount of business to be written from an adviser perspective, plus we know that – of that retention business – over two-thirds are coming up for renewal in the first six months of 2023 alone. And, of course, with returning borrower clients – indeed any clients – always comes the opportunity to look again at need and circumstance, and to reassess both with regards to protection, insurance and other ancillary sales opportunities.

Between now and the end of the year, we are likely to have some ‘quiet time’ but the work carried out now in terms of ensuring the business is ready to hit the ground running in 2023, will undoubtedly provide plenty of dividends later.

You might well argue, the market is going to benefit from this brief respite – lenders are clearing down their pipeline and prepping for new rates/ranges, while the start of any new year often brings a return of enquiries and volumes as people use the holiday period to decide on what they want to do next.

Those enquiries should be corresponding with a lender community whose appetite will be considerable, and there could be a lot of chopping and changing from a rate and product point of view during those early weeks.

Again, a volatile and ever-changing market means consumers will be much more inclined to seek advisers to help steer them through this, and therefore advisers who can market their business effectively to new clients and can push home their advantage with existing ones, should be able to take advantage of this.

There really is nothing to fear but fear itself when it comes to 2023 – work through any doubts you might have about what could happen and prepare yourself for what will happen and how you can influence it. The more you do this, the more likely you are to have a very happy new year.

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Office address: 1310 Solihull Parkway, Birmingham Business Park, Birmingham B37 7YB
Paradigm Mortgage Services LLP is registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.