By: Jack Williams

Many are concerned for the future of house prices after the last few months, and we are all hoping the market will bounce back soon. Nationwide have said cheaper mortgage rates in 2023 could help the housing market and prevent homeowners selling their houses due to mortgage defaults.

What is happening to UK house prices?

Annual house price growth began to slow as we came to the end of 2022. Nationwide building society have released data reporting four consecutive months of declining house price growth. All regions were recorded to have slowed in annual price growth during the late months of 2022. As expected, different areas performed better than others, with East Anglia the strongest and regions in Scotland the weakest.

December showed a sharp decline in house price growth from 4.4% in November to 2.8%. This is a much smaller reduction than in previous months, however December revealed the fourth consecutive monthly price fall. Financial market conditions have now settled following the mini-budget; however, mortgage rates are taking more time to recover, and the housing market has not yet shown a clear sign of recovery.

Will things improve in 2023?

The longer-term interest rates that uphold mortgage pricing have returned to the levels prior to the mini-budget. If these levels remain steady, this should reflect in mortgage rates, improving the affordability position for potential buyers. Although, the primary factor that will assist house prices is if forced selling due to mortgage defaults is avoided. We can be optimistic on this, as around 85% of mortgages are still on fixed interest rates. Unemployment is expected to rise to 5% in the coming years, however this is still low considering the history of unemployment in this country.

Lenders have continued to slowly reduce the pricing of their fixed rate mortgages, nevertheless, many will still come off their fixed rate and be in for a shock with their payments. It is expected that lenders will release more attractive products in the new year, appealing to many potential buyers and those needing a remortgage.

If you need any advice regarding the changes in mortgage rates, or on a new potential mortgage or remortgage, don’t hesitate to contact us and one of our advisors can assist you.