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February 26, 2024
PI Global Investments

Facing challenges head on in 2024

Matthew Cumber Countrywide 2023

“The brightest of lights for intermediaries in 2024 will be the increased reliance on the advice process to ensure that a variety of increasingly complex borrowing needs are being met”

As we enter the closing weeks of the year, it’s evitable to see a plethora of data and reflections on the year that was, and predictions emerge for the year ahead. For much of the mortgage market, this will make for some uncomfortable reading at times but these are conditions which we, as an industry, can’t shy away from and we have to face these challenges head on. Although, on a far more positive note, plenty of encouraging signs have emerged for the intermediary market over the later part of the year.

But let’s get the negative news out of the way first.

UK Finance is predicting a further fall in mortgage lending next year, following a 2023 gross lending dip of 28%. Breaking this down, the figures show that residential lending fell by 23% this year, while new buy-to-let purchase lending is down by 53% and external remortgaging decreased by 21%.

Looking ahead, UK Finance forecasts that gross lending is likely to fall by a further 5% to £215 billion in 2024, with residential lending and external remortgaging both predicted to contract by 8%. Buy-to-let purchase lending is expected to fall by a further 13% to £7 billion.

While the outlook for 2024 doesn’t paint the healthiest of pictures, it’s certainly not all doom and gloom with the main pressures on affordability seemingly peaking for many borrowers and levels of competition rising as lenders vie to maintain and even increase market share.

Rightmove’s latest House Price Index also delivers some further optimism, outlining that the 2023 market has demonstrated far more resilience than predicted in many quarters. New seller average asking prices end the year just 1.1% below figures seen 12 months previously, while sales agreed for the year to date are only 13% lower than the same period in the more frenetic 2022.

There are also signs that the increasingly stable housing market conditions will see more family movers return, many of whom put their plans on hold due to the mini-Budget fall-out and the wider economic and mortgage market uncertainty. Looking ahead, Rightmove predicts that new seller asking prices will drop nationally by an average of 1% in 2024, with motivated sellers still needing to price below their local competition to secure a sale, as buyer affordability remains stretched.

Let me just throw one further piece of important data into the mix as average two and five-year fixed rates across all LTV tiers have fallen for a fourth consecutive month and now stand at a six-month low. This is according to market analysis from Moneyfacts and will come as good news to borrowers across the spectrum, including first-time buyers. The choice of mortgage deals is also trending in the right direction, even for those borrowers with a smaller deposit or equity, with December seeing over 700 deals for borrowers to choose from, its highest count for over a year.

The brightest of lights for intermediaries in 2024 will be the increased reliance on the advice process to ensure that a variety of increasingly complex borrowing needs are being met in a truly holistic manner. For advisers, it’s all about delivering as much guidance as early in the process as possible. From outlining and meeting clients surveying needs through to discussions about conveyancing, energy efficiency and future plans. The best advisers have all the right information to hand and trusted referral partners in place to help their clients on every step of the mortgage journey. This is where the real value is added and why lenders, borrowers and service providers will lean even more heavily on the intermediary market in 2024 and beyond.

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