Mortgage Market Overview – March 2023

Published on 21 March 2023

Stay up-to-date on the latest mortgage market trends and industry news with our monthly updates. Our team of expert advisors provides insightful analysis and expert commentary on a range of topics, including mortgage rate trends, housing market forecasts, and industry updates.

Bank of England Base Rate 4.25%

Market Overview

It wasn’t a surprise to see The Bank of England raise interest rates by 0.25% the 11th rise since December 2021 due to a rise in inflation creating upward pressure on the cost of borrowing. Market fluctuations are making it difficult for lenders to set the bar on fixed interest rates.

What does the rising base rate mean for the mortgage market. 

  • Bank’s MPC use interest hikes as a means of cooling the economy and taming rising inflation. 
  • The Consumer Prices Index (CPI) measure of inflation rose to 10.4% in the 12 months to February – higher than the 9.9% expected by analysts – due to rising costs in the restaurant, cafe, food and clothing sectors 
  • Despite the increase to Bank of England base rate we have contradiction of competitive fixed mortgage rates, but with an added warning of fixed rates fluctuating daily. 
  • The most competitive deals, 4.08% for a two-year fix, 4.14% for a three-year, and 3.94% for a five-year. The best 10-year fixed rate deal today is priced at 3.99%.
  • Increased number of mortgage products – According to Moneyfacts Residential mortgage product availability is up 4,372 compared to 3,643 at the start of 2023.


  • While base rates go up in the short term, the view is that inflation will slow quickly, and interest rates fall then potentially resulting in SWAP rates being lower than base rates. The 5-year UK SWAP rate is currently 4% and has fallen back from a high of 5.3% last year. (Zoopla) 
  • Bank of England governor Andrew Bailey reported “to be more optimistic now” about the UK economy following the interest rate rise to 4.25 per cent on Thursday. The Bank revealed it no longer believes the UK will face a technical recession this year.

“Spring Budget Snapshot”

  • Pension lifetime allowance, the maximum amount that can be saved into a pension without paying an additional tax charge, will be scrapped from 6 April 2023
  • The Energy Price Guarantee (EPG) will be frozen at its current level of £2,500 until June, saving households from paying average bills of £3,000.
  • The 30-free hours of childcare system is to be extended to children aged nine months from September 2025. It will be introduced from April 2024, as 15 free hours to children aged two and over.
  • rise to fuel duty was cancelled and it was frozen for the 13th year in a row. The 5p per litre discount for fuel, which is currently in place, will remain until March 2024 collectively saving drivers around £5bn.
  • The amount of corporation tax for companies with over £250,000 in profits pay will rise to 25 per cent, from 19 per cent, from April.

The government has said it will create 12 investment zones across the UK, putting £200m into regeneration projects and plough £400m into Levelling Up partnerships.

Green Shoots

  • Principality supporting NHS & Professional clients with increased affordability!
  • Generation H – “Deposit Booster” friends or family can contribute up to 100% of buyers deposit either by way of a gift, interest free loan or an equity loan (like help to buy).  If affordability is an issue, a “Boosters” income can be considered to enhance the client’s income without affecting stamp duty! Only available via intermediary. 
  • As lender margins are squeezed with competitive interest rates, they are now looking at ways to improve lending criteria to increase market share.
  • Halifax offering 95% LTV have made slight improvement to affordability for EPC A&B rated properties. 
  • Skipton B.S Offering 95% lending on new build houses 90% on new build apartments (shared ownership 95% of the share) 
  • “Rent to Buy” or “Save to Buy” picking up pace, this is a private scheme offered by some developers helping first time buyers to get a foot on the property ladder.

Dates to be mindful of

  • Help to buy further extension can be applied for, giving a revised legal completion of 31st May 2023 
  • The next Bank rate decision will be taken on 11 May 2023.

Overall, there is a positive momentum within the mortgage market as lenders compete on price and look to innovate criteria. Reports note that we may have seen the summit of rising interest rates and hopes that the cost of borrowing will start to decrease. 

The team at 177 are available 7 days a week, Monday – Friday 9.00 – 6.30 pm & Saturday & Sunday 10.00 – 5.00pm. Get in touch today on 0800 098 7177 or book a call back.

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