Although 2023 has been challenging for the mortgage market, it has also offered opportunities, and activity has continued to tick along.
However, it now feels as if we are stepping into a new phase, with the rate of inflation showing tentative signs of easing and interest rates edging down with more conviction.
As we step into Q4 and start to think about when it’s appropriate to switch on the heating (we have already succumbed), it seems a fitting time to take a temperature check of the market and look forward to the months ahead.
In the past month it’s been positive to see the return of sub-5% rates, as swap rates start to stabilise. And ‘stabilise’ is probably the important word here as it is highly unlikely we will return to the ultra-low rates we saw pre-2022.
In this new normal, advisers must remain on hand
It is key, therefore, that we begin to regard where we are now as the new normal and align our own businesses to this; and perhaps, more importantly, also help any consumers, who may be ‘sitting on their hands’ waiting for ultra-low rates to return, to have the confidence to get on with any remortgage or house move.
It is also very important we remain ready to help. Mortgage repayments could be higher than some first-time buyers budgeted for, and this extends to many of the 1.6 million remortgagers reaching the end of their mortgage term next year.
Weight in gold
This is where advisers remind us they are worth their weight in gold. Even though mortgage rates are lower than they have been recently, the market is not immune to another ‘rate shock’.
In this new normal, advisers must remain on hand to guide customers through the range of options at their disposal, including specialist solutions, moving to interest-only in line with the Mortgage Charter, and longer-term deals.
Now is the opportune moment to check in with those customers remortgaging next year and demonstrate how you can help.
This maybe is a good time to consider how you market yourself and your services
Our 2023 Bank of Family research found that just 39% of aspiring homebuyers had sought guidance from a mortgage broker or professional adviser before drawing on financial support from family members, revealing huge untapped potential for advisers at the other end of the scale too.
It is also important to take a moment to acknowledge a job well done. The industry’s efforts to align with the new Consumer Duty were a success, especially given the sheer scale of the regulatory changes. We ticked off the latest deadline on 31 July, with the next landing exactly a year later. It signals a new era of customer protection, and our industry can pride itself on its adjustment to the new regulation.
Are you looking at how your business can become more efficient, especially reviewing your technology requirements?
However, as my colleague, Zara Bray, rightly said, the latest deadline was a starting line and not a finishing one for our Consumer Duty efforts; we are only at the end of the beginning.
We have set up the processes and reviewed our businesses. Now is the time for living and breathing the Consumer Duty and ensuring this is part of everything we do.
Our new normal will also mean a smaller lending market. If reports of a 10% decline, both this year and next, from the highs of 2022 materialise, we could see a market, including product transfers (PTs), that is around £100bn lower by the end of 2024. That may mean proc fee income across the industry falls as well, maybe by around £300m.
It is crucial, therefore, that brokers focus on how they can set themselves up for success in the future, and take some time to reflect on what their business needs for the next few months and, possibly, years.
‘Stabilise’ is probably the important word as it is highly unlikely we will return to the ultra-low rates we saw pre-2022
Are you prioritising seeking and nurturing leads?
Do you have a focus on growing and maintaining PT business amid this quieter period for new enquiries? Are you looking at how your business can become more efficient, especially reviewing your technology requirements? Do you have the best deals from your suppliers?
This maybe is a good time to consider how you market yourself and your services, as well as which services you offer — is it time to upskill? Could you lean into a new area of the market?
Is it worth investigating referral business? There is likely to be less low-hanging fruit in terms of new-business enquiries, so it’s time to start sowing the seeds for a fruitful new year.
This year hasn’t been smooth sailing for our market, but there are signs that we’re turning the corner.
Kevin Roberts is managing director of Legal & General Mortgage Services
This article featured in the November 2023 edition of MS.
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