UK Finance has published its mortgage market forecast for 2023–2024, anticipating a softening in the mortgage market next year that marks a return to pre-pandemic norms.

UK Finance stated: ‘Amid challenging times for the UK economy, we expect cost of living pressures and rising interest rates to reduce demand for house purchases between 2023 and 2024.

‘We expect the number of property transactions to fall 21% next year (from around 1.2m in 2022 to 1m in 2023), with the value of lending to homeowners dropping 23%, and lending to landlords falling 27%. Despite the anticipated fall in activity, the UK has a strong mortgage and housing market which will remain competitive.

‘At the same time, we expect to see strong demand for refinancing as around 1.8m fixed rate mortgage deals are scheduled to end in 2023.

‘Affordability pressures facing borrowers will mean some borrowers, particularly amongst lower income brackets, may find re-mortgaging options more limited on the open market. However, with widespread availability of internal product transfers, we expect refinancing overall to be strong through next year. We expect to see around £212bn of product transfers to take place next year, compared with an estimated £197bn in 2022.’