They say ‘A friend in need, is a friend indeed’ this sums up the essence of a mortgage, having a good friend when you really need help. And what better time than now?

We’d like to think everything was as much as the good old saying goes, however, this perception seems to have undergone a change in recent times. Mortgages have seen a shift and are being viewed in a not-so-positive light. With the advent of the recent financial crisis and uncertainty, many businesses and customers are holding back in reluctance when it comes to expanding their financial strengths and dealing with personal transactions. In this article, we will look at what the coming new year presents as challenges and how to meet them.

The latest changes in the financial sector have seen escalating interest rates, due to the base rate hike up to 3.5%, and this has of course been on a continuous incline since 2008/2009. This has made borrowings even harder, particularly in the mortgage sector. The success of mortgages after all, depends on the amount that can be set aside by the borrower to pay back the loan. The rising cost of living determines the payback strength of borrowers, and this, in turn, will affect how a mortgage can be initiated.

Coping with upcoming changes

2022 presented a unique set of challenges, with the easing of the pandemic, the forecasted ‘calming’ of the mortgage market (in comparison to a turbulent 2021) seems to have set in. An indication of price stabilization can be seen, especially with the average pricing for housing hitting lows during the latter part of 2022 and which is expected to continue in the coming year as well.

Along with drop-in housing rates, bank rates that peaked in 2022 are expected to drop rapidly in 2023. This would translate to better mortgage rates that will follow with better rates for borrowers. However, it is a given fact that rising bank rates do pose difficulties to the borrower.

An article on next year’s mortgage market by mortgagestrategy.co.uk, predicts a drop in mortgage lending. With these changes, fluctuating rates, interest rates, and base rates what does it mean to you, the borrower and how are you supposed to cope with it?

Will mortgages go up or down?

Considering the hiked-up bank rates, it would be wise to consider what best suits your payback method. Many of us would like the option of going by fixed-rate borrowings, especially when the mortgage is a long-term one. While this may seem a sensible option under normal circumstances, it might not be the right choice at this moment in time along with the rising bank rates. Gaining an upper hand on a mortgage could be simple as understanding the method of pay back. A mortgage after all is a loan, and you might be among those with mortgage for a two or five year span, while fixed term re-payments guarantee a steady rate off your monthly income, the fluctuating rates predicted in 2023 could have a detrimental effect on such fixed outflows especially if your period of payment is a long one. On the contrary to conventional thinking, SVR repayment or tracker mortgages are likely to yield a better or easier repayment schedule in comparison to fixed rates. According to expert views by mortgagestrategy.co.uk, housing mortgage lending is expected to fall by 15%. As a result of this drop, lower interest or payback rates could be expected. With this context in play, a borrower could benefit without having to comply with a fixed rate payment scheme. By converting or obtaining a mortgage for variable payments, they would benefit with lower interest rates.

Conclusion

While predictions for 2023 are somewhat vague, financial forecasters do predict a silver lining for the coming year. The turbulent past 2 years seem to be vaning off. Although still sketchy, 2023 is seemingly the year that brings about stability for slow but steady growth to all sectors including housing. Mortgaging is an essential financial activity that assists borrowers achieve their goals and aspirations.

Mortgaging not only helps borrowers to complete their  future plans, but also plays an integral role in the economy of the country, assuring healthy cash flows are maintained while creating a balance between businesses and their customers and the economy. Expert opinion is optimistic both for the lender and the borrower in 2023.

Looking back at the past 2 years, 2023 in comparison will be a year of optimism and turn around for many. With the hope of utilizing mortgage facilities as their preferred choice and method of purchasing a house or any other related financial activity.

Let’s keep this in mind, ‘Seizing the opportunity at the right time is what its all about’.