Property & Mortgage Outlook – May 2022


A major estate agent has predicted the UK property boom is about to end, with prices set to stagnate following years of sustained rises.

Knight Frank is predicting that house prices will return to single-digit growth this year, before rising by just 1% in 2023. It said the UK would see an unwinding of the rampant growth seen over the past two years as the cost-of-living bites, mortgage rates rise, and a greater supply of homes hits the market.

The housing market has experienced an unexpected boom since the pandemic began. House prices have rocketed 14.3% over the past year according to Nationwide Building Society, with property inflation hitting its highest level since 2004. That means the typical UK home is now worth a record £265,312.

Some experts believe the UK property market has defied gravity over the course of the pandemic. Tight supply, low interest rates, accumulated household wealth and a desire for more space and greenery have conspired to produce double-digit house price growth over the last year. However, Knight Frank’s view is that that is all about to change, with house prices growing by 5% this year, and just 1 per cent in 2023. It is predicting that over the course of the next five years, average UK house prices will rise by just 13.6% – less than they did in the last year alone.

There are several factors that will act as a drag on future house price growth, according to the estate agency group. First, it believes mortgage rates will continue to increase alongside further predicted base rate rises by the Bank of England. The base rate determines the interest rate the Bank of England pays to banks that hold money with it and influences the rates those banks charge people to borrow money. Mortgage rates have already been rising over the past few months. Knight Frank also expects the effects of the cost-of-living squeeze to begin curtailing home buying appetite. Inflation reached a 30-year high of 7% as of March this year, and it is expected to soar even higher in coming months.

Best Buys* (as of 10th May 2022)

Initial Rate Description Subsequent Rate Overall Cost For Comparison (APR) Early Repayment Charge Max Loan Fee
1.39% 2 Year Tracker – Penalty-Free 4.89% 4.10% None £1m £995
2.14% 2 Year Fix 3.79% 3.50% 2% Year 1, 1% Year 2 £1m £999
2.19% 5 Year Fix 3.79% 3.20% 5% Year 1, reducing by 1% annually to 1% by Year 5 £5m £999
1.69% 2 Year Fix (Buy to Let) 4.74% 4.50% 1.5% Year 1, 1% Year 2 £1.5m 2%


Following the MPC’s decision to increase bank base rate three times in the last four months, pundits are still predicting further increases as a response to the threat of rapidly rising inflation. With mortgage rates having more than doubled from the start of the year, there has never been a greater need for Clients to seek independent advice against the backdrop of informed interest rate commentary.


There are over 700,000 UK mortgage products maturing during 2022. Many will push the button for a product transfer direct with their existing lender which may seem the ‘free and easy’ option. However this route rarely takes into consideration your personal circumstances, future plans or affordability. Our partners can benchmark the best products offered by an existing lender against the best in the open market, highlighting all savings and costs.

* Lending criteria restrictions apply to all products, always seek independent advice.

Articles on this website are offered only for general information and educational purposes. They are not offered as, and do not constitute, financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.

Past performance is not a guide to future performance and may not be repeated. Capital is at risk; investments and the income from them can fall as well as rise and investors may not get back the amounts originally invested.

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Source: Professional Mortgage Services & Techlink.


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