The end of one year and start of the next gives us a moment to reflect and to consider what is likely to happen in the mortgage and housing market in the coming 12 months.

There is no doubt that 2022 has been a turbulent year, with house prices continuing to rise dramatically and then a sudden drop-off as Government economic policy created shockwaves.

Both Nationwide and the Halifax report a fall in house prices for October and November and Lloyds is predicting an 8% fall next year.

Rising interest rates, including a half percentage point increase this week, and the cost-of-living crisis have all put the brakes on people’s decisions over house-buying and that brings down demand which subdues prices.

People will also have one eye on those prices. A rash purchase now could see some buyers looking at negative equity if they have suddenly committed to borrowing more money than their house is worth.

So where does that leave potential house buyers and especially first-time buyers?

Looking ahead it does seem likely that house prices will continue to fall a little and then hopefully plateau. After the crazy price rises over the past few years, that might not be such a bad thing. House prices might just get to somewhere near realistic again. Changes to the criteria for buy-to-let mortgages might slow that particular gold rush, making more properties at the lower end of the market available. After rocketing following the first mini budget this autumn, mortgage interest rates are coming down, making borrowing relatively more affordable.

Taken together, these factors might make getting on the housing ladder a little easier in 2023 but I don’t expect a boom in first-time buyer purchases. Rather I would expect the coming 12 months to be rather tentative, with people nervously dipping their toes in the housing market rather than jumping in with both feet.

With years of possible uncertainty ahead, the best plan remains to get on a fixed-rate mortgage if you can. Rates went up dramatically but are starting to fall back again and with no clear picture of what is likely to happen in the coming few years, some locking in of your mortgage costs still seems a sensible option.

For a free, no-obligation discussion on any mortgage or insurance-related issue, please give me a call on 01723 384558 or 07767 692 653 or email me at mgrayshan@googlemail.com