"Inflation having come down from its double-digit highs, and product rates having both stabilised and fallen, is clearly having a major impact."
Ours is an industry that is predicated on confidence. Whether that be consumer confidence to begin the property-owning journey, homeowner confidence to sell up and move elsewhere, lender confidence to be active in the market with a greater appetite to lend, developer confidence to buy and build on the land they own, it all works together to give us the market we have.
And, of course, from this we generate our own confidence for the business we can write, the transactions we can deliver, the clients we can support, and the income we can earn.
From that perspective, it was encouraging to read the results of the latest IMLA Mortgage Market Tracker which looks at adviser confidence in the existing market and its outlook for the future.
It showed a notable increase for the last quarter of 2023, with 83% of those polled expressing confidence about the market, which was up considerably from the 65% who said the same thing back at the tail-end of 2022.
Now, given that was a period just after the disastrous ‘Mini Budget’ we should perhaps not be surprised that we are all a great deal more confident about the market a year on from that.
But, it is still a much stronger number – up 18% - and of course it will have come after a year when, at times, it felt like there was very little to be confident about.
Even though we know the intermediary share of the mortgage market is now up around the 85/90% mark, when that market is a lot smaller than it has been in recent history, then that’s undoubtedly going to have an impact in terms of client activity and written business.
Certainly, we saw purchase business down considerably through 2023, as consumers encountered a much higher interest rate environment than they had seen for the best part of 15 years. Remortgaging was also hit, not least because higher interest rates meant higher affordability challenges to be overcome, which left many existing borrowers with little option but to accept a PT from their lender, rather than being able to remortgage away.
Clearly, that all impacts on advisers, but I’m pleased to say that we did see those green shoots towards the end of 2023. A point reflected by the fact the average number of cases handled by advisers rose to 95, from 92 in Q3. Indeed, for mortgage specialists the number was over 100 – at 103 – while IFAs averaged 62.
Coming fully back up to date, there is plenty to say that advisers’ increased belief and confidence in the market is justified, not just from a remortgage perspective – which has tended to be the foundation of our market recently – but also in a much-needed return for greater levels of purchasing.
The latest RICS survey shows that new buyer enquiries lifted to a balance of plus-7% in January, up from minus-3% in December, with agreed sales also seeing a notable 10% shift, up to plus-5% at the start of 2024 from minus-5% at the tail end of last.
Surveyors seem to be following the same mindset as advisers in that regard. Plus-14% of respondents said they believed sales would continue to pick up over the next three-month period, while plus-44% said volumes would rise over the year as a whole.
What can we put this down to? Well, it’s an obvious point to make but inflation having come down from its double-digit highs, and product rates having both stabilised and fallen, is clearly having a major impact.
Last year, you must wonder how many prospective purchasers (and movers) simply looked at what was achievable from a mortgage finance point of view and realised they could not afford to carry out their plans. Lower rates allow more people to make that choice, and it’s clear we’re starting to see that reflected in both demand, activity and confidence for advisers in what might come next.
Overall, 2024 does already feel very different to what we had through most of 2023, but that does not mean our sector should take our collective foot off the gas, neither does it mean neglecting other important client wants and needs, simply because there is more mortgage activity to be dealt with.
Recent history tells us the importance of ensuring the mortgage is not the only business written, and of course, a purchase or remortgage client presents a very real opportunity to explore all manner of ancillary needs, namely protection, GI, conveyancing, etc. Not forgetting the referrals and recommendations that can be secured as a result of delivering that full, holistic advice process.
If we are seeing the beginning of greater confidence returning to the market, then it’s vitally important to make the most of it.
