Reflecting on 2023
Bob Hunt
12 December 2023As 2023 draws to a close, it’s possible to reflect upon a particularly challenging 12-month period for the mortgage intermediary community; one which we all hope will not be repeated in the year ahead.
Unsurprisingly, the scale of that challenge is reflected in the recent housing and mortgage market forecasts from UK Finance, which show gross lending falling 28% year-on-year to £226bn, and lending for house purchases down 23% to £130bn.
No one working in the advisory space will be shocked by these figures, nor will they be wondering why external remortgage business dropped 21% to £65bn, internal product transfers increased by 11% to £219bn, or why for example, new buy-to-let purchase lending decreased by 53% to £8bn.
They will have been feeling those figures every day in terms of the advice they give to clients, and in terms of the solutions they have been trying to find customers, in an interest rate/affordability environment which is much changed from the past decade, and which has had a severe impact, particularly on consumer confidence, but also clearly in terms of progressing with mortgage finance.
In the midst of all this, advisers have had to deliver on the biggest piece of regulatory reform since RDR and the MMR, with the FCA introducing its Consumer Duty rules which required fundamental change for every single firm, and continue to need ongoing engagement, resource, investment, and time in order to keep on top of their requirements.
A combination of market conditions and this regulatory change will have made 2023 especially difficult for advisers, and yet despite all this, amongst my member firms and so many other distributors in the industry, I’ve witnessed real and tangible resilience and determination day after day.
The mortgage adviser sector has always been a resilient one, but this year’s conditions might well have challenged even the most optimistic of individuals – it has not just been high interest rates, but also the continued high cost of living, international factors such as the ongoing war in Ukraine and the conflict in Gaza, the continued turmoil in our own Parliament, all playing their part in making these incredibly difficult times.
However, and certainly when it comes to the mortgage market conditions we have seen over the past 12-18 months, I can’t help but feel optimistic about what 2024 might bring, and there is a part of me that fundamentally believes, when it comes to rates, affordability constraints, product availability, house price corrections and the poor consumer confidence generated by all of this, the worst is now behind us.
In the last month or two we have some tangible evidence of the positive progress that is being made, as we have greater certainty and clarity in terms of interest rate levels, with no recent moves by the MPC, and swap rates which have continued to track downwards.
This greater degree of positivity has been reflected in lenders being able to drop rates, but to also review their product ranges and to add to them, and we have seen growth in product numbers which again should provide further opportunities for those clients who may have felt ‘outside’ the market over the past 12 months.
A falling rate environment not only gives potential purchasers more scope to look at their buying options, but it opens up the remortgage opportunities for existing borrowers too. In recent times, the PT option has sometimes felt like the only one available for many homeowners seeking to refinance, but lower rates should open up the remortgage market much more, which will clearly help existing borrowers but also advisers who can look at securing a healthier procuration fee as a result.
Consumer Duty continues to shed light on the ancillary product options that advisers should be exploring, whether that is protection or GI or conveyancing or any other housing finance related need, such as second charges or bridging loans or later life lending.
It’s increasingly imperative that advisers are able to cover off these advice needs themselves, or at least have a referral option available in order to keep hold of that client and to ensure they have access to these options.
Combined together, I make no apologies for my positivity about what the market can be for advisers in 2024. It appears to me, full of opportunities amidst a market which is increasingly turning back in consumers’ favour, and if firms/advisers can survive and thrive in the environment they have been dealing with in 2023, they can certainly make the most of better conditions in 2024 and beyond.
Unsurprisingly, the scale of that challenge is reflected in the recent housing and mortgage market forecasts from UK Finance, which show gross lending falling 28% year-on-year to £226bn, and lending for house purchases down 23% to £130bn.
No one working in the advisory space will be shocked by these figures, nor will they be wondering why external remortgage business dropped 21% to £65bn, internal product transfers increased by 11% to £219bn, or why for example, new buy-to-let purchase lending decreased by 53% to £8bn.
They will have been feeling those figures every day in terms of the advice they give to clients, and in terms of the solutions they have been trying to find customers, in an interest rate/affordability environment which is much changed from the past decade, and which has had a severe impact, particularly on consumer confidence, but also clearly in terms of progressing with mortgage finance.
In the midst of all this, advisers have had to deliver on the biggest piece of regulatory reform since RDR and the MMR, with the FCA introducing its Consumer Duty rules which required fundamental change for every single firm, and continue to need ongoing engagement, resource, investment, and time in order to keep on top of their requirements.
A combination of market conditions and this regulatory change will have made 2023 especially difficult for advisers, and yet despite all this, amongst my member firms and so many other distributors in the industry, I’ve witnessed real and tangible resilience and determination day after day.
The mortgage adviser sector has always been a resilient one, but this year’s conditions might well have challenged even the most optimistic of individuals – it has not just been high interest rates, but also the continued high cost of living, international factors such as the ongoing war in Ukraine and the conflict in Gaza, the continued turmoil in our own Parliament, all playing their part in making these incredibly difficult times.
However, and certainly when it comes to the mortgage market conditions we have seen over the past 12-18 months, I can’t help but feel optimistic about what 2024 might bring, and there is a part of me that fundamentally believes, when it comes to rates, affordability constraints, product availability, house price corrections and the poor consumer confidence generated by all of this, the worst is now behind us.
In the last month or two we have some tangible evidence of the positive progress that is being made, as we have greater certainty and clarity in terms of interest rate levels, with no recent moves by the MPC, and swap rates which have continued to track downwards.
This greater degree of positivity has been reflected in lenders being able to drop rates, but to also review their product ranges and to add to them, and we have seen growth in product numbers which again should provide further opportunities for those clients who may have felt ‘outside’ the market over the past 12 months.
A falling rate environment not only gives potential purchasers more scope to look at their buying options, but it opens up the remortgage opportunities for existing borrowers too. In recent times, the PT option has sometimes felt like the only one available for many homeowners seeking to refinance, but lower rates should open up the remortgage market much more, which will clearly help existing borrowers but also advisers who can look at securing a healthier procuration fee as a result.
Consumer Duty continues to shed light on the ancillary product options that advisers should be exploring, whether that is protection or GI or conveyancing or any other housing finance related need, such as second charges or bridging loans or later life lending.
It’s increasingly imperative that advisers are able to cover off these advice needs themselves, or at least have a referral option available in order to keep hold of that client and to ensure they have access to these options.
Combined together, I make no apologies for my positivity about what the market can be for advisers in 2024. It appears to me, full of opportunities amidst a market which is increasingly turning back in consumers’ favour, and if firms/advisers can survive and thrive in the environment they have been dealing with in 2023, they can certainly make the most of better conditions in 2024 and beyond.
