British banks and building societies expect to lend 23% less to home-buyers next year, taking mortgage volumes back to their level before the COVID pandemic after a two-year boom that lifted house prices by more than a quarter.
Trade body UK Finance forecast on Monday that gross mortgage lending for house purchases would fall to £131bn in 2023 from £171bn this year and a peak of £189bn in 2021, when pandemic-related tax incentives were in force.
Lending to buy-to-let landlords was forecast to fall by 27%, and overall residential property sales were likely to drop to 1.01mln next year from 1.27mln in 2022, it added.
"Amid challenging times for the UK economy, we expect cost of living pressures and rising interest rates to reduce demand for house purchases," it said.
In another downbeat survey of the UK housing market today Rightmove PLC (LSE:RMV) said the average asking price of homes being put on the UK market has fallen by 2.1% in the last month in the biggest pre-Christmas dip in the last four years.
The UK’s biggest property website said the average asking price was £359,137 in early December, down £7,862 from November.
Last week Halifax said prices in the UK fell by 2.3% in November, the largest monthly drop on its index since the start of the 2008 financial crisis, while at the start of the month, Nationwide said UK house prices were falling at the fastest pace in almost two and a half years.