2022 has been an intense year of change when it comes to mortgage rates, and at times, it’s been hard to keep up. Confused about the property market after the past 12 months? Here, our contractor mortgage partner, CMME, tells you all you need to know to help inform your mortgage decisions for 2023.

At times over the past year, it’s been hard to keep track of the changing property market as not only did UK house prices skyrocket but mortgage rates did too. The continual rises come down to several factors, from Brexit to Russia’s invasion of Ukraine.

The cost-of-living crisis has put significant strain on the economy, and it’s been particularly difficult for people, especially those who are self-employed, to get on the property ladder with climbing monthly outgoings.

If you’re looking to buy your dream house but are struggling to understand the property market after the past 12 months, you’re not alone. Below, we have gathered all the information you need, from what happened over the last four quarters to predictions for 2023.

What’s happened to mortgage rates across 2022?

The last four quarters have been a whirlwind with regards to mortgage rates. At times, it’s been hard to keep track of the situation as not only did UK house prices hit an all-time high but mortgage rates did too. In January 2022, the Bank of England (BoE) revealed that net borrowing of mortgage debt had increased to £5.9 billion from £4 billion the month before.

Further changes during Q1 included three 0.25% base rate increases, taking it from 0.25% up to 0.75%. It was a good time for sellers as, according to Nationwide, the annual rise in house prices saw an increase of 2.5% in January and 0.2% in February.

As we entered the second quarter of 2022, rates continued to rise. Interest on fixed mortgages reached 2.6% by April, and the base rate hiked to 1% in May and again to 1.2% in June. Russia invaded Ukraine, and this caused further uncertainty and strain on the economy. COVID’s impact and Brexit complications also sent inflation climbing, reaching 7.8% by April.

The third quarter started with the average interest on 90% loan-to-value (LTV) fixed mortgages sitting at 3.67% and, by September, this had increased to 4.47%. The base rate jumped by 0.5% on two separate occasions, and the quarter ended in fiscal chaos when Kwasi Kwarteng, the Chancellor in Liz Truss’s short-lived government, announced the mini-budget.

The mini-budget was referred to as ‘The Growth Plan,’ and finance experts considered its policies to be radical. This resulted in a loss of confidence in market conditions and, towards the end of September, banks and building societies started withdrawing mortgage products and increasing rates.

By the end of November, the average interest rate on 90% LTV fixed mortgages reached 6.25%, with further increases expected. According to an analysis by the Labour Party, families were left to pay more than £530 extra for their mortgages when comparing 2021 to 2022.

What’s likely to happen in the mortgage market in 2023?

Over the last 12 months, mortgage rates have been particularly volatile so making an accurate prediction for 2023 figures isn’t easy.

There’s a chance that the BoE base rate could reach 6%, with interest rates always higher than this. Also, there are suggestions that the housing market is slowing down, which will result in prices falling and homes becoming more affordable. The FTAdviser estimates that house prices will fall 5% in 2023, and prime prices in Central London are expected to fall by 3%.

We expect to see fierce competition in the market entering next year, as there’ll be an urgency among people who want to buy and have been waiting for the right moment. Properties won’t be sitting around on the market for long if the predicted fall in prices occurs.

What should I consider when buying in the current climate?

If you were hoping to buy next year, you might feel worried after the past 12 months. While each person’s circumstances are different, there a few top tips that might help when it comes to securing the best mortgage offer available:

• Review different loan option
• Find a good lender via a mortgage broker
• Weigh up different rate scenarios
• Keep a close eye on interest rate movement

From the experts

Simon Butler of CMME says: “After a year of twists and turns the mortgage market is likely to be a much calmer place in 2023. New interest rates will continue to fall despite the strong possibility of further base rate rises.

“Lenders will be expected to support borrowers both existing and new that are struggling with increased interest rates, energy prices and the cost of living.

“Expect to see a market leaning into innovation and adjustments made to affordability checks to further encourage would-be buyers to consider a new home.”

You can also see what industry experts have to say for 2023 in the latest article from MoneySavingExpert

Self-employed and looking to enter the property market? Given the ever-changing financial scene and the resulting uncertainty, there’s a lot to think about. The specialists at CMME are on hand to help you source the best mortgage rates available. Get in touch today to find out how they could support you.

Rising mortgage rates on your mind?

With the average standard variable rate (SVR) now at 6.64%* are you concerned about your current deal coming to an end?

Now may be the right time to speak to our partner, mortgage experts CMME

Why CMME?

• Fast service with specialist underwriting for self-employed professionals
• 6,948 5*reviews and Platinum Trusted Service Award in 2023
• A whole of market mortgage broker with 18 years of experience
• Dedicated specialist advisor every step of the way tailoring advice to you
• Exclusive deals not available on the high street

A free initial consultation with an expert is a great way to get started and avoid paying more on your next mortgage deal.

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NOTE: Your home may be repossessed if you do not keep up repayments on your mortgage. *Source: Moneyfacts Analyser Report 10/01/2023.

CMME is a trading name of CMME Mortgages and Protection Ltd. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798). Registered in England No. 04886692. Registered Office: 2 Glass Wharf, Bristol, BS2 0FR. Please be aware that Commercial Mortgages, Overseas Mortgages and some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. Calls may be recorded for training and security purposes and to improve the quality of our services.