With the latest Bank of England base rate announcement behind us and no immediate change on the horizon, it will certainly be interesting to see how quickly lenders make rate adjustments in the coming weeks. This month has already seen many price reductions and the trend is likely to continue. It’s been positive to see lenders focusing on new options to support affordability, particularly with respect to the introduction of a variety of lower rate/higher fee products. Let’s kick off this month’s round-up with an example of just that.

Charlotte Harrison, Interim CEO - Home Finance, Skipton Building Society for Intermediaries, shares her market predictions for 2023 and what they may indicate for borrowers, homeowners and first-time buyers.

As I write on what is referred to as “blue Monday” am I feeling that sense of gloom, with Christmas cheer and relaxation a distant memory? Perhaps.

But a little less daunted by what’s to come and instead, relishing a new set of challenges that face us following the backdrop record levels of lending seen in 2022. In my view the outlook for 2023 certainly isn’t all doom and gloom.

So, looking at the year ahead, what can we expect?

To start with, I think it's likely we will continue to see rises in the Bank of England base rate, but that doesn't necessarily mean customer rates are going to increase in the same way.

I’d like to drill down into some of the details which have emerged from Q1 2022 for landlords around yield and tenant demand – two fundamental elements in any successful portfolio.

Yield is an interesting one. It remains a balancing act for landlords who are looking to maximise the return of their investments whilst also factoring in rising living costs for their tenants who, like many homeowners, are feeling the pinch in the current economic climate. Yields will obviously differ when it comes to different property types, hence the current demand for holiday lets, short-term lets and HMOs. However, despite their growing popularity, the vast bulk of the BTL market continues to be dominated by the more ‘standard’ longer-term lets, a factor we have to consider when looking at general trends in rental yield.

We’re quickly heading towards that time of year when many people tend to have one eye on the past and one on the future. For landlords, 2021 has proved to be an opportunity-laden year and there’s plenty of optimism in the air to suggest that 2022 will see the private rental sector become an even more prominent focal point within the economy, the housing market, the mortgage industry and the intermediary community. 

One area already looking well ahead into the new year is the student community which – after a sustained period of uncertainty, remote studying and living far afield from campuses – has seen numbers return in their droves. A move which is bolstering rental demand in the larger, student-heavy areas which really suffered over the course of the pandemic.