Trust your own gut when listening to market predictions

With the first month of the year out of the way, it has (I hope) been a highly active one for all mortgage advisers.

Certainly, if our business numbers are anything to go by, you have kicked off the new year in fine fettle, and it already ‘feels’ a much different market to that which we saw for the vast majority of 2023. 

Indeed, just a little over a month into the year, it looks like the incredibly conservative numbers predicted by our main trade bodies, particularly Intermediary Mortgage Lenders Association (IMLA), at the end of last year are already looking off kilter. 

I understand there is perhaps a fine line to tread between being realistic about the mortgage market and what could be coming this year, but this prediction in particular seemed to me to veer too much on the cautious, being seemingly over-pessimistic. 

Perhaps there is a feeling of being chastened by the previous year’s prediction, which, quite frankly, was some way off the reality of what the year did deliver.  

However, I’m also of the opinion that much of what unfurled during 2023 couldn’t have been predicted, particularly the big drop in activity caused by a much higher interest rate environment, due to persistently high inflation.  

But at the end of 2022, IMLA predicted gross lending of £265bn in 2023 and £250bn this year. However, now it is predicting £205bn this year and a slight increase to £210bn in 2025, when it actually feels like the former numbers could actually be the reality of this year and next.  

It also predicted the Bank Base Rate (BBR) will end the year at 5.75 per cent – a 50 basis point increase – but suggests there may not be the read-across to mortgage rates. It is early days, but there are few in the market now who anticipate BBR won’t be cut at least once or twice this year.  

The relevance of market forecasts 
Which might lead some to ask why this actually matters.  

Well, my view is that fortune does favour the brave in our market, but I’m also conscious that many firms do take notice of what the trade bodies are predicting.  

After all, they have the data available to them from our lenders, and you would think they are likely to have a comprehensive steer on the situation. 

That being the case, it might lead owners to hold back in a market that is actually performing beyond the trade body’s initial anticipation, when what is actually required may be more investment, more resources, a raft of new relationships and a real focus on expansion to deal with increased demand/activity and business. 

What I would say is that it’s clearly not too late to shift plans and change strategy based on the reality of the situation rather than what some have predicted, particularly when your own business might be telling you something completely different. 

Playing it safe 
What I hope has not happened here is a situation where the trade body actually believes the market will perform better but doesn’t want to be too far out in turn with its prediction. 

Far better, it might have thought, to under-represent the market and be wrong ‘the right way’ – the market performed better than we thought – rather than the market continued to underperform and we were out by the best part of £30bn-40bn in our estimates. 

It is very early days, but if future months continue to perform as the market has done in January, then I hope we see these predictions revisited. Again, this matters because it would give advisory firms greater levels of confidence and perhaps give them further evidence that any expansionary plans they may have put in place were the right call.  

All in all, believe in your own reality as a business or an adviser and react accordingly. Being positive about the market and your own ability to make the most of it is a strength and you should seek to capitalise upon it.