The mortgage market is constantly evolving, and In this article, we'll be comparing the state of the mortgage market in December 2022 to January 2023.

The past year saw significant events, such as rising inflation rates and interest rates, increased competition among lenders, and shifting market sentiment. These events have had a profound impact on the mortgage market and have set the stage for the changes we'll be discussing in this article.

Whether you're a first-time home buyer or a seasoned property investor, this article will provide you with a comprehensive overview of the current state of the mortgage market and what you can expect in the coming months. So sit back, relax, and let's dive into the January 2023 mortgage market compared to December 2022.

December 2022: The Harsh Reality of the Mortgage Market

The year 2022 was a challenging one for the mortgage market. The 12 months leading up to October 2022 saw inflation reach an alarming 11.1%, which put pressure on the market and raised concerns about the economy. As a result, lenders increased their interest rates, with the Bank of England raising interest rates nine times throughout the year. Despite this, the property market remained relatively active, with Rightmove reporting a 11% increase in property visits compared to the same time the previous year.

However, the media painted a bleak picture, forecasting doom and uncertainty in 2023.

Despite the challenges, the mortgage market in December 2022 was marked by increased competition among lenders. With the decoupling from the Overnight Index Swap Rates, lenders were free to set their own rates, which led to a more competitive market. This increased competition, combined with the rise in property visits, was a sign of hope in a otherwise challenging year for the mortgage market.

Overall, December 2022 was a mixed month for the mortgage market. While the high inflation rate and interest rate rises put pressure on the market, increased competition and a relatively active property market provided some optimism for the future. In the next section, we'll explore the changes that took place in January 2023 and what they mean for the mortgage market.

January 2023: A New Dawn for the Mortgage Market

January 2023 brought with it a shift in the mortgage market. On January 10th, mortgage sourcing platform Twenty7tec saw its largest day ever for mortgage searches, with a staggering 83,877 searches. This sudden increase in activity was a clear sign that the market was picking up.

The optimism in the market was further reinforced by the opinions of experts and analysts. On January 15th, Richard Donnell, a journalist for the Sunday Times, claimed that we should be optimistic about the property market. He explained that the market is predominantly equity-driven, with a decrease in the reliance on leverage in recent years. This, combined with better bank regulations since the 2008 financial crisis, means that house price fluctuations are likely to be regional, not nationwide.

The sentiment was echoed by Property Forecaster, a buy-to-let investment site, which reported increased opportunities for property investment in the North East, with potential for significant growth. This was supported by a report from Sky on January 16th, which showed that the average price of homes had jumped by £3301 and the volume of prospective buyers sending inquiries to estate agents was up by 55%.

On January 18th, the Telegraph reported that mortgage rates had fallen to their lowest in over three months and that experts predict that rates will continue to drop as lenders compete for business. Hansen Lu, former economist for the Treasury Select Committee and House of Commons, and currently senior economist at Aviva, stated on January 23rd that "it could very much be the case that as we approach these future market rates and the Bank of England rate keeps rising, it could be that mortgage rates stay reasonably stable."

The market shift was also good news for first-time buyers, with the Telegraph reporting on January 25th that a borrower in November 2023 could pay £4500 less per year in monthly payments compared to a borrower who took out the same loan in November 2022. On January 31st, the Telegraph reported that "the most competitively priced five-year mortgage deals are soon expected to drop below 4%."

Conclusion

The mortgage market has undergone significant changes in the past year, with interest rates rising and inflation reaching an all-time high. However, despite this, the market has shown signs of resilience and optimism. In January 2023, the market saw an influx of searches for mortgage options, and experts predict that mortgage rates will continue to fall as lenders compete for business.

Furthermore, there has been a shift towards a more equity-driven market, with a decrease in the reliance on leverage and better bank regulations in place. This has also led to increased opportunities for property investment in certain regions.

For first-time buyers, the shift in the market means good news, with potential to save thousands on their monthly payments compared to just a year ago.

In conclusion, the mortgage market may face challenges, but it remains a thriving industry that offers promising opportunities for homeowners and investors alike. At Willow Private Finance, we stay informed on the latest market trends and work tirelessly to provide our clients with the best possible mortgage options.

References

Rightmove (2022), Property visits up by 11% in December, retrieved from https://www.rightmove.co.uk



Twenty7tec (2023), January 2023: the biggest day ever for mortgage searches, retrieved from https://www.twenty7tec.com/

The Sunday Times (2023), Richard Donnell, retrieved from https://www.thetimes.co.uk/article/8cddfb64-929f-11ed-b849-7c425fb89a82?shareToken=828998b74c9e3cf6edd9fc6428757c59

Property Forecaster (2023), Increased opportunities for property investment in the North East, retrieved from https://www.propertyforecaster.co.uk/

Sky News (2023), Rightmove reports average home price increase, retrieved from https://news-sky-com.cdn.ampproject.org/c/s/news.sky.com/story/amp/house-prices-rise-higher-than-expected-in-january-alongside-pent-up-buyer-demand-12787874

The Telegraph (2023), Mortgage rates fall to three-month low, retrieved from https://www.telegraph.co.uk/personal-banking/mortgages/major-bank-cuts-rates-100-mortgage-deals-escalating-price-war/

Aviva (2023), Hansen Lu, senior economist, retrieved from https://www.mortgagesolutions.co.uk/news/2023/01/23/llle2023-fixed-mortgage-pricing-could-stay-stable-even-if-the-base-rate-rises-lu/

The Telegraph (2023), Market shifts good news for first-time buyers, retrieved from https://www.telegraph.co.uk/personal-banking/mortgages/monthly-mortgage-repayments-could-fall-25pc-year/

The Telegraph (2023), Mortgage rates soon to drop below 4%, retrieved from https://www.telegraph.co.uk/personal-banking/mortgages/cheapest-mortgage-rates-nearing-4pc-lender-price-war-knocks/?utm_content=233868064&utm_medium=social&utm_source=facebook&hss_channel=fbp-375873355786136

At Willow Private Finance, we believe in providing our clients with accurate and up-to-date information on the mortgage market. The references above have been carefully chosen to support the information presented in this article.