What's in store for 2023?

Little over a week left of January.  The longest month of the year.  Team MFS have been busy with road trips to Barratt Homes in Inverness and Elgin and catching up with our clients.  Remortgage discussions have started, options to buy are being researched and we’ve planned a long overdue team catch up.  

Now that the dust has settled a bit, Cameron looks at what 2023 will bring.  

Lower mortgage rates

Rates are dropping but not at the same rate they rose back when the mini-budget was released.   I don’t see the rates going below 4% in the first half of 2023, perhaps not at all in 2023.   Comparing December 2021 with January 2023 shows how much the interest rates have impacted on affordability.

In December 2021 an average mortgage rate was 1.9% fixed for 2 years at 90% on a new build house.  Today it is 5.29%.  Let that sink in...

If you originally had a budget of £900 per month, you could have bought a property at £300,000 with a 10% deposit.  This is repayment over 35 years

If you wanted that same property within the same budget, you need a deposit of £120,000 or increase your budget to £1,415 per month.  This is still on repayment over 35 years.

House Prices

Rightmove’s report early in January indicated people were motivated to buy.   There’s a 0.9% increase in house prices with buyer demand up by 0.4%.  This is back to pre-pandemic levels.  It’s an encouraging start to the next year.    

Industry experts do predict house prices to fall by about 10%.  This will be dependent on areas.  Initial reports for London property prices have shown that they’ve risen by 3% whereas the UK average shows a 1.5% decrease in property prices.  Of course, it’s not fair to use London as a comparison but it highlights that the area is important.  

For those buying investment properties in Scotland, the rise in the Additional Dwelling Supplement (ADS) from 4% to 6% has been a heavy burden.   This applies on every property you buy that isn’t your main residence and with a price of £40,000 or higher.  For those building a property portfolio this is quite a fee to manage.  

Buying in 2023

For anyone buying, whether it’s your first home, next home or investment, get advice from a mortgage broker.  Someone who is knowledgeable about the market, has access to a wide variety of lenders and will get to know your needs and wants.  

When we look at remortgages for our client, we always see if their current lender will offer the most competitive rate.  If that’s the case, and we can’t do the application, we will advise our clients of this and let them choose.  Ultimately our team focus on what’s right for our clients.  

For first-time buyers, having as big a deposit as you can manage, will help with lower monthly mortgage payments.  If you’re buying a new-build property, the builder may offer 5% deposit contributions.  In January a lot of our conversations with first time buyers was centred around deposits.  Some of our clients have opted to wait a few months, save some more, then speak to us again about options.  

Team MFS will be road tripping in February and March with Barratt Homes again.  Our admin team will work on getting applications for mortgages and insurances through to offer/terms issued as quickly as possible. Our team of advisors will grow as we welcome Zara back from maternity leave in May.    

2023 will be a better year, we’ve already seen slight decreases in inflation as well as some GDP growth.  It will be a cautious year but with the right advice for your needs, Team MFS can help you on your property journey.