Mortgage market forecast

What can we expect from the UK mortgage market in 2023?

The mortgage market, alongside the UK housing market, experienced a strong wave of activity over the past couple of years, but the post-Covid era is expected to see a return to the ‘norm’.

The UK property market defied the odds against the backdrop of the pandemic, helped by a build-up of appetite from those who had put transactions on hold alongside the stamp duty cut incentive, and people’s new housing priorities.

This led to a huge surge in demand in the UK mortgage market, with a distinct rise in lending figures from both homebuyers and landlords.

Now that things are beginning to level off, UK Finance’s latest report predicts that overall mortgage lending will fall by 15% in 2023, which marks a return to the levels we were seeing before the pandemic hit in 2020. 

The mortgage market outlook for 2023

It also forecasts that the value of mortgage lending in the house purchase mortgage market will drop by 23%, which UK Finance believes will be impacted by cost of living pressures and interest rate hikes. In the buy-to-let space, the decline could be 27%.

In terms of actual property transactions in the residential market, the outlook is a fall of 21% in 2023 – again bringing levels more in line with what we saw pre-pandemic. This will see transactions drop from 1.2 million this year to 1 million next year.

One side of the mortgage market that could see growth, though, is in the refinancing space. This is because a huge number of new loans were taken out during the highs of 2021 in particular – meaning approximately 1.8 million fixed rate deals are set to end in 2023.

UK Finance also expects internal product transfers to be more readily available to borrowers next year, particularly those in lower income brackets, meaning the mortgage market could see around £212bn of product transfers next year – compared with £197bn in 2022.

And despite the overall drop in activity and transactions, UK Finance points out that the country’s mortgage market and housing sector will remain strong, meaning there will still be plenty of competition.

Mortgage arrears are at historic lows

Unemployment remains low compared to historic figures, meaning that mortgage arrears are also at a healthy low level, along with the number of possessions taking place.

While the outlook from UK Finance is that there will be a relatively small increase in arrears in the mortgage space in the year ahead, it believes the “vast majority” of mortgage-holders will still be able to cover their mortgage payments, despite the cost of living increase.

The increase in arrears, when it does arise, is expected to be felt from early 2023 as financial pressures and interest rises begin to take their toll. UK Finance predicts that there will be 98,500 households in arrears next year – around 1% of outstanding mortgages. But this is still a low level by historic standards.

Pressures could take their toll

James Tatch, principal, data and research at UK Finance, said: “As we look ahead, the mortgage market is expected to enter a period of relative weakness from next year as house prices, the cost-of-living and interest rate pressures put a brake on new demand.

“The high level of activity during the 2021 stamp duty holiday means that a large number of borrowers are due to refinance next year, pushing up the expected value of refinancing in 2023. 

“The pressures being seen on household finances could mean that some customers have fewer options. However, there is wide availability of product transfers – we would encourage customers to speak to a whole of market mortgage adviser to discuss the options best suited to their circumstances.

“As always, any customers who find themselves in difficulty should speak to their lender at an early stage, as the industry stands ready to help with a range of forbearance options that can be tailored to best suit individual customers’ circumstances.”  

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:


Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment


Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:


+44 (0) 333 123 0320

Open from 9am-6pm GMT


+852 6699 9008

Open from 9am-6pm HKT