"Challenging lending and borrowing conditions over the course of 2023 have inevitably placed an even greater emphasis the mortgage advice process."
Generally speaking, I’m someone who likes to look on the brighter side of life. We obviously can’t ignore how tough a year 2023 has been across the entire mortgage space but that doesn’t mean that we can’t look forward to 2024 with some renewed optimism following a far more encouraging second half of the year.
First and foremost, it’s important to point out that business is still being done on many levels. There are a number of larger landlords out there who have become increasingly active as the year has progressed, especially when it comes to larger property types which may have formerly been deemed as lesser alternatives.
From a residential perspective, Bank of England data suggested some lending recovery in Q3, making it the strongest lending quarter in 2023 by a short distance and more recent BoE figures showed that mortgage approvals have begun to rebound amid some subdued lending conditions. The data outlined that net mortgage approvals for house purchases rose from 43,700 in September to 47,400 in October to mark the end of the decline seen since June 2023. Net approvals for remortgaging with a different lender also increased from 20,600 in September to 23,700 in October.
An interesting shift has also been noted in the purchase market with the latest analysis from Zoopla outlining that buyers are securing huge discounts off the asking price as the number of homes for sale reaches a six-year high.
According to Zoopla’s latest House Price Index, the discount to asking price for achieved sales now sits at a five-year high and has grown to 5.5% for sales over the first half of November compared to a 3.4% average discount in the first half of 2023. This is being keenly felt in the south of England where the average discount to the asking price for sales is 6.1% in London and the South East - equating to a total reduction of £25,000 off the asking price.
Despite buyer demand remaining 13% lower than in 2019, new sales are still being agreed with the total volume currently 15% higher than this time last year, and 5% up on 2019 levels. This indicates greater realism on the part of sellers and a growing sense among would-be movers that mortgage rates may have peaked and could start to fall later in 2024.
Challenging lending and borrowing conditions over the course of 2023 have inevitably placed an even greater emphasis the mortgage advice process. Emphasis which is only likely to further accelerate given the additional complexities being experienced within the industry and beyond. Meaning IMLA’s prediction that the intermediary market could account for 90% of mortgage distribution by 2024 - as reported in its ‘New Normal’ report around this time last year - remains very much on the cards.
Moving forward, these intermediaries will be tasked with helping a growing number of individuals and households to avoid falling though the mainstream lending cracks which are opening up from an affordability and criteria perspective.
Thankfully, these same advisers are recognising the qualities on offer throughout the specialist lending marketplace to support a range of credit-worthy clients in achieving the right outcomes for them over the short, medium and longer-term. Especially for those with complex or multiple sources of income, key workers and for borrowers – new and existing - who may have experienced some historic, or more recent, credit issues along the way. And with more innovative products in development and criteria enhancements ready to be rolled out, this is a marketplace which is set to generate even more attention over the next 12 months.
