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High Mortgage Rates
It’s no secret that mortgage rates have been skyrocketing for almost two years now, with the sharpest rate hikes in the MPC’s history having a detrimental effect on almost everyone in the industry. After remaining at 5.25% for the past three consecutive MPC meetings, Bank Rate appears to have reached its peak and mortgage rates have been gradually falling over the second half of 2023, but are ultimately still much higher than they were for many years.
As a result, brokers have had a much more difficult time in 2023 simply because less people can afford to think about mortgages or are waiting for rates to drop again before taking the plunge.
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Increase in Specialist Lending
The last few years have not been easy, but the spectacular rise of specialist lenders has helped to alleviate this difficulty when it comes to getting a mortgage. Since the COVID-19 pandemic caused many people’s needs to shift with the sudden rise in working from home combined with the cost-of-living crisis, there has been a substantial increase in cases of specialist borrowers who do not fit the criteria for high-street lenders.
Therefore, specialist lenders have been helping to ensure that buyers are not left behind as a result of a tough few years on the economy, leading many to predict that this could be the start of a golden age for the sector.
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Broker Mental Health
This year has seen an already stressful career become even more taxing with the cost-of-living crisis and the huge hike in mortgage rates taking an emotional toll.
However, things are improving, with the Mortgage Industry Mental Health Charter striving to keep the mental health conversation going in the broker industry. Moreover, it was revealed in May of this year that almost 60% of brokers now have access to mental health support at work. Nevertheless, there is still a lot of work to be done, especially given the current economic climate in which intermediaries are working.
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Consumer Duty
One highlight of this year was the FCA’s introduction of Consumer Duty in order to implement consumer-friendly practices in firms across the country. Since July 31, lenders and brokers have had a clearer collective responsibility to strive for the best possible consumer outcomes. This will be particularly helpful for those looking to remortgage as universal standards will help to increase competition, which could in turn create some desperately needed reform in the sector.
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Rise in Mortgage Prisoners
Unfortunately, the rise in interest rates has led the number of mortgage prisoners to increase, with millions of fixed-rate mortgages coming to an end this year. Among these are many people who no longer pass the affordability checks to secure another fixed-rate mortgage in the current economy and have instead been forced to move to their lender's SVR.
Furthermore, an increasing number of people have ended up stuck in negative equity, with the fall in house prices leading bank representatives to tell the Treasury Committee in July of this year that first-time buyers should now simply expect this, at least for a short time.
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TikTok
This one may surprise you, but the social media platform has become a very useful tool for brokers to reach young people and keep them informed about the mortgage industry during this challenging time. As Gen Z reach adulthood and start looking to purchase their first homes, 90% of them are using TikTok, compared to just 37% on Facebook.
Therefore, brokers on TikTok have opened themselves up to a whole new audience of prospective clients and are simultaneously helping young people to stay informed and up to date on mortgages. While there are risks associated with using social media for mortgage advice, the most notable being that it can be hard to separate qualified knowledge from influencer conjecture, it is a golden opportunity for many intermediaries to reach the next generation of first-time buyers.
