A surge of optimism for the market

Our tendency to focus on the first and second halves of the year has been accentuated in 2024, with the 4th July General Election acting as a sizeable break with what has come before, especially with the new Government that has now been ushered in.

Regardless of your political affiliation, we at least have a degree of stability now, and one can already start to sense a growing optimism about what this could mean.

As we know, political stability often enhances market confidence, hopefully encouraging both buyers and sellers to act.

Additionally, lower inflation and the potential for a reduction in the Bank Base Rate could further support the market by making borrowing more affordable.

We’ve already seen some noticeable moves in mortgage product rates, particularly over the last week or so.

So, what of 2024?
Well, what we do know is that after a pretty strong start to the year in January and into February, the last few months have been fairly static.

The latest Money and Credit report for May 2024 from the Bank of England revealed a decline in net mortgage borrowing, which fell to £1.2bn from £2.2bn in April, alongside a decrease in net mortgage approvals, down to 60,000 from 60,800.

Despite these figures, there are, I would say, many more reasons for optimism in the mortgage advisory market for the remainder of the year.

Traditionally, the housing market experiences a slowdown during the school summer holidays.

However, this year might be different. Many potential buyers and sellers have delayed their decisions until after the General Election, which suggests a potential surge in market activity now that the election is settled and the political landscape is clearer.

The Royal Institution of Chartered Surveyors (RICS) provides additional context with its most recent Residential Survey.

The survey reveals the market remained relatively subdued in June, with buyer demand, sales, and prices staying in slightly negative territory.

New buyer enquiries had a net balance reading of -7% in June, a slight improvement from -8% in May. Newly agreed sales showed positive movement though, improving from -13% to -7%.

Despite recent softening, expectations are I believe turning more optimistic. A net balance of +20% of respondents predicted residential sales volumes would recover over the next three months, up from +10% the previous month.

This represents the most upbeat near-term sales expectations since January 2022.

At the same time, house prices remained unchanged from the previous month, with a net balance of -17%. However, regional disparities showed positive trends in Northern Ireland and Scotland, which recorded net balances of +64% and +29%, respectively. Looking ahead, a net balance of +41% of contributors expect house prices to increase over the next 12 months.

While RICS suggested the election had had limited impact on buyers and sellers, with mortgage rate reductions playing a more significant role, now we could have a prolonged period where both a new Government and falling rates help in terms of rebounding market confidence and activity, although economic concerns may still temper homeowners’ price aspirations.

Opportunities ahead
For mortgage advisers, in my view, the current market does present numerous opportunities to capitalise on this renewed activity and optimism.

We’re all acutely aware that large numbers of mortgages are coming up for maturity, which in a falling rate environment, might well provide more remortgage opportunities rather than the client having to accept a product transfer (PT) from their existing lender.

To help in this regard, our annual ‘Summer of Marketing’ series offers sessions and support designed to help advisory firms maximise their marketing efforts and secure more business. By leveraging these, advisers can enhance their strategies, attract more clients, and navigate the evolving market landscape effectively.

Looking forward to the rest of 2024, advisers have a clear chance to seize a significant portion of mortgage business.

The new Government’s stability, falling inflation, and ongoing interest rate cuts should create a more favourable environment for borrowing.

Additionally, the traditional summer slowdown might be less pronounced this year due to this post-election market activity.

As potential buyers and sellers who delayed their decisions now move forward, there could be a notable increase in transactions.

The RICS survey’s findings further support this optimistic outlook. The positive expectations for residential sales volumes and house prices over the next 12 months suggest a market poised for growth.

Advisers who stay informed and utilise resources like our marketing sessions, and the access to lenders, products and services we offer, should be well-positioned to make the most of these opportunities and drive their businesses forward.

Overall, while the Spring months of 2024 showed a decrease in mortgage borrowing and approvals, the broader economic context and recent trends indicate potential improvements in the latter half of the year.

By staying proactive and leveraging available resources, mortgage advisers can navigate the evolving market landscape and capitalise on the opportunities presented by the expected surge in activity and optimism.