"While the wider residential housing market is in decline, this presents opportunities for the resilient broker that is prepared to investigate new markets"
New research from Crystal Specialist Finance has revealed how mortgage brokers viewed the market in the first half of 2023 and gathered their thoughts on their business and the industry for the remainder of the year.
Crystal surveyed its broker database in early July to gauge their thoughts on the industry and get a sense of how they are feeling about the market going into the second half of 2023.
60% of brokers thought H1 2023 was about the same or worse than 2022. At the end of 2022, 48% of brokers surveyed agreed that 2022, despite its challenges towards the back end of the year, was a good year for business and indeed better than 2021.
The uncertainty brokers shared at the start of the year remained, but the picture had improved. At the start of 2023, 74% of responders stated that they were either unsure about the year ahead or worried about the prospects for their business. This number had dropped to 67% by early July.
At H1, brokers placed more emphasis on continued interest rate uncertainty as the key factor that will impact their business in the remainder of 2023, at 80%, rising from 76% at the start of the year.
The relevance of cost of living crisis lessened with 66% polled citing it as having an impact, down from 76% at the start of 2023.
However, more brokers agreed that more clients lacked confidence. By half one it had risen to 40% from 35% at the start of year.
Interestingly, brokers have had a big shift in their thoughts on the direction and peak of the Bank of England Base Rate. At the start of the year there was some optimism with over half of respondents (54%) stating that it wouldn’t go above 5%. Now 40% think it will peak above 6% and only 10% believe it will peak at 5.25%. At the start of the year 54% believed that Bank Rate wouldn’t even reach 5%.
The data also reveals that most brokers diversified into new markets in the first half of 2023 in response to market challenges, with bridging finance leading the way at 27%. 23% expanded into commercial finance and 20% into buy-to-let.
This diversification looks set to continue, with 67% of brokers agreeing that they expect to diversify further during the remainder of 2023.
Jo Breeden, managing director at Crystal Specialist Finance, commented: “At the start of 2023, we were hoping for some form of stability with inflation coming under control and this being reflected in mortgage pricing and availability. Instead, we saw the opposite and it is only as we approach Q3 that inflation is falling – but not at the rate the Bank of England or the markets want to see.
"Our survey has revealed that brokers are still uncertain about the remainder of 2023, just as they were at the start of the year. That said, many have used the opportunity to diversify into new markets to bolster their businesses and I’m delighted to see the increasing importance of a master broker like Crystal in helping them achieve that.
"While the wider residential housing market is in decline, this presents opportunities for the resilient broker that is prepared to investigate new markets – such as bridging, commercial finance and complex buy to let – where Crystal specialises. As ever, we will continue to provide our expert support as the industry faces into a challenging second half of the year.”
