Mortgage lending edged up last year but 2023 set for slowdown

There was £77.5bn in residential loans lent in the final quarter of 2022 totalling £318.3bn for the year, according to specialist lender Octane Capital.

This was down from £85.9bn in the third quarter, according to analysis of data from the Bank of England and the Financial Conduct Authority (FCA).

While the impact of market turmoil in September led to a lower end to the year, the fourth quarter was still 10.4 per cent higher on an annual basis.

Slowdown to continue into 2023

Octane Capital chief executive Jonathan Samuels (pictured) predicted the slowdown will continue in 2023.

He said: “Despite a string of consecutive base rate hikes, we continued to see a strong and consistent level of lending in 2022.

“However, it’s fair to say that turbulence seen at the back end of the third quarter has left its mark and we expect to see total lending drop during the final quarter of the year.

“Despite this, total lending should still sit higher when compared to 2021 but it’s probably fair to say that this will be the market peak, with 2023 likely to bring a slow but steady decline in lending figures for the first half of the year at least.

“However, bond markets like a steady hand and both Sunak and Hunt are believed to provide one, as evidenced by the most recent budget that barely registered a murmur.

“As a result, we’ve already seen gilts and swap rates stabilise and we believe this will remain the case throughout next year.

“While the knock-on effect to mortgage rates has been gradual, momentum is building for a steady reduction which should benefit buyers in 2023. So, while total lending is likely to drop in the short term, it won’t be the cliff edge that many are predicting.”