Higher mortgages will obviously cause the demand to go down.
As recently as 12 months ago it was possible to have a 75% LTV,m fixed for 2 years, at 1%. Now I don't think you can find a 2-year fix for less than 5%. To put things into context, banks had to "stress test" borrowers by 3% more, ie if they gave you a mortgage at 1% they had to verify you could still pay even with rates of 4%. Well, they are now much higher!
A simple example: a 25-year £600,000 mortgage at 1% means payments of £2,261 per months.
After 2 years you will have paid ca. £43k of principal.
If after those 2 years you remortgage at 5%, that's £3,400 per month - a 50% increase!!!
Even if your salary has gone up in those 2 years, it won't have gone up enough to compensate.
Oh, and don't forget that a salary increase of, say, 6% of your gross salary, means your net increases by less than 6%.
I personally don't think it will be a catastrophe, but the impact will be felt. Those who stretched themselves to the max entering into bidding wars between 2020 - 2022 will be in very bad shape. The others, well, obviously it depends.