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Are Mortgage Rates Going Down in 2023?

Updated: Feb 2, 2023

Despite the fact, the Bank of England Base rate has been rising over the past year and now stands at 4%. How high will the rate peak and when will it start to come down?

We offer knowledgeable explanations of the factors that led to the increase in interest rates last year, the potential outcomes and effects of a drop in mortgage rates, and what products could be available to you.

The Following Are Covered:

What Was The Cause Of The Rise In Interest Rates?

A strategy to combat inflation is the Bank of England's monetary policy changes, which steadily increase the base rate.

As more people cut back on spending and saving, inflation is stabilized and the economy is slowed as a result of rising borrowing costs.

The ongoing war in Ukraine has further impacted the Bank of England's changes to interest rates as the energy crisis and geopolitical conditions worsen in 2022.

How Is The Mortgage Market Affected By The Rise In Interest Rates?

The cost of financing rises at higher interest rates in all real estate market segments. An increase in interest rates is having a big impact on affordability.

With buy-to-let mortgages, the tightening of rental stress tests is having an impact on the amount clients can borrow. The stress test uses a qualifying rate that is typically higher than the mortgage contract rate. Generally, in today's market, it is the Pay rate plus 2% or the reversion rate, whichever is higher. The minimum generally is 5.50%.

What Mortgage Types Are Most Affected by Interest Rate Changes?

Until their mortgage terms expire and they must renew their loans, customers with fixed mortgage rates are temporarily exempt from paying higher rates.

The makeup of mortgages with variable and adjustable rates' monthly payments has already changed, though. If you want to understand the main differences between we recommend looking at the different types.

Will Mortgage Rates Continue Going Down?

Political stability is now helping to stablise the mortgage market, and as a result, lenders in the UK are cutting back on lending and there are more affordable products available.

The reason for the increase was in response to the then chancellor Kwasi Kwarteng whose September Mini Budget included £50 billion in unfunded tax cuts, therefore lenders priced higher interest rates at levels not seen since the 2008 financial crisis.

The economy has now stablised, largely since the election of Rishi Sunak, and because the current Chancellor Jeremy Hunt has reversed most of Kwarteng's measures which have provided more confidence in the market.

A housing price decline that will run through into 2023 has positively added to mortgage rates dropping as lenders are becoming more competitive to meet the lower demand. Since October and November last year, the number of UK mortgage approvals fell from 58,997 to 46,075 – a 20 percent drop.

How Can I Access The Best Products?

Looking to refinance or purchase an investment property? We have access to over 50+ lenders in the specialist space and specific products that are not available when customers go direct.

If you would like a fee-free quote, you can get started using the link below.


This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.

Accelerated Finance Limited only considers applications for commercial or investment properties.

Accelerated Finance Limited is not regulated by the financial conduct authority and only provides unregulated loans via our network of lenders. Your property is at risk if you fail to make payments on a Mortgage Contract.

Please note that Accelerated Finance Limited and its employees do not give financial advice or recommendations on any product.

Author: Aakash Nagrani - Director 

Aakash Nagrani Author
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