The last 12 months have been another tricky period for the mortgage market, as prospective and existing borrowers have faced challenges such as soaring inflation and higher interest rates.
So what are we likely to see in 2024 and what specific areas does the mortgage sector need to focus on during the year ahead?
We asked leading industry figures for their take on what’s in store next yet.
Vikki describes 2023 as a challenging year, but says there have been opportunities too.
“The biggest maturities market we have ever seen has presented lots of opportunity to advise customers,” she says.
“Equally the nature of advice and the difficult conversations with customers facing significant price rises has never been so emotive.
“Brokers have been the conduit between market conditions and customers, adding real value and contribution to positive outcomes.
“This should be something to take forwards - the value of advice has never been more pertinent.”
Vikki believes conditions will remain challenging in early 2024, as “economic and political pressures prevail”, but believes the market will bounce back later on in the year.
“There is an expectation that purchase business will begin to come back,” she says.
“With pent-up demand and political support for the housing market, the year could end up much brighter.
“With this outlook, brokers should be maximising their customer base to secure as much as they can, forecasting maturities for the year ahead and expected retention. New opportunities, emerging markets and different product lines should all be part of the plan.
“Now and moving into 2024 is an ideal time to work on your business, not in it. Stability and certainty is key, whilst giving an agility to the business to react when conditions improve.”
Martin states that even though the industry expected 2023 to be a “challenging year”, it still turned out to be “one of the most stressful periods for advisers”.
“The first half of the year saw unprecedented product withdrawals, meaning that time management and short notice decisions were required by both advisers and clients,” he says.
“As an adviser, from feedback we have received, they felt like they were stuck in the middle of this. This has continued with the unintended consequences of the Mortgage Charter and the ability/requirement to offer product changes during the application process.
“The role of the adviser is continually evolving and ensuring that there is open transparent dialogue between lenders and advisers is paramount.
“We are both aiming for the same outcome of better financial decisions by the client so it should be a partnership.”
Martin predicts that 2024 will be another challenging year, but stresses that he expects to see a “decreasing rate environment”.
“In the short term, that may not equate to a growing market, but we do expect H2 to see improvement on H1,” he continues.
“We will have an election at some point, and it will be interesting to see what all the parties state within their manifestos around the housing market.
“Change can always see an uplift in positive sentiment, and this will help the market but probably more in 2025.
“There will be many other macro and micro challenges during the year to navigate and I do not believe that advisers can over-communicate with their clients at present.
“They have voted overwhelmingly that they need advice, with over 90% of new loans being intermediated.
“We work in the market every day and react to changes as they happen, but clients may only enter the market every few years and so advisers have a great opportunity in giving them clear, concise help and guidance.”
Danny says the events of 2023 have shown how resilient the mortgage sector is and how important it is to help every single customer.
“Even through this difficult time, more customers have taken life cover which has been very positive, so lots to be happy about,” he states.
Danny adds that 2024 is likely to see more of the same, although consumer sentiment might pick up more quickly than many expect.
He also predicts that there will be more opportunities for remortgaging in the year ahead.
Rory and Sebastian believe the market has been “very volatile” throughout 2023.
“The year started slowly, but most of our advisers and firms enjoyed a really good February, March, April and May,” they observe.
“However, with a spike in inflation, we all sadly watched mortgage products rocket upwards in June and July.
“The expected summer slowdown came, but then we had a really flat few months, as the raft of base rate increases and swap rate moves started to seriously dent consumer confidence and hit the purchase and additional borrowing remortgage market really hard.
“As of mid-October, the pace has picked back up and November is looking very strong indeed.”
Although Rory and Sebastian aren’t expecting to see any big changes in the market over the coming months, they are starting to feel “quietly optimistic” for 2024.
“Many of our adviser firms have made a number of structural commercial changes, which should mean that even maintaining the same levels of business will be more profitable.
“We also feel that there are a number of changes waiting in the wings, both in terms of new lenders and criteria enhancements, which should allow consumers greater choice and opportunity.
“Unfortunately, as the market has been quite tough this year, some brokerages have not survived. However, when the market does start to recover again, this will create an opportunity for existing, new and emerging brokerages to benefit from next year and beyond.
“Consumer Duty will continue to be a significant theme in 2024 and the issue of foreseeable harm and what that means to the advice process will evolve yet further.
“In many respects, this is a return to the standards of advice that used to be employed in face-to-face meetings back in the 1990s, when an adviser would spend time explaining in detail the reasons for needing protection, or having a will, or going through moving costs.”
This, they state, is “no bad thing”.
For Louise, the last year has demonstrated that constant product rotations are still happening and lenders need speed to market to stay competitive.
“As a sourcing platform, managing this at times has been challenging due to the amount of requests we get in on a daily basis and our ethos on maintaining high quality data,” she says.
“It Is noticeable how much quicker lenders can react and launch new rates ,so it's important that we work with lenders to understand what we can do to improve the current journey of launching those products to market.
“2023 has also shown the growing importance of technology and understanding that some brokers need more support than others in adopting change.
“Therefore, one-to-one support can be crucial to helping them feel confident and in control.
“Providing multiple channels for supporting brokers and improving adoption across the industry has been key for us to help drive this forward.
Going forward, Louise is keen to see how affordability and eligibility criteria may change in order to help the market bounce back, especially as there will be many homeowners in the UK with fixed rate mortgages expiring.
“Sourcing and criteria platforms must continue to play a crucial role here in ensuring this data is as clear as possible and that it can be factored into the source results so that the correct products are accessible by brokers,” she says.
“I can see more niche product types entering the market to support the underserved and the non-traditional cases.
“Since the pandemic, we have seen a shift towards specialist and non-traditional vanilla products, so sourcing platforms will need to join this journey and understand what they can do to display and filter niche products effectively.
This, she believes, will help brokers identify the right product for their client in the easiest and most efficient way possible.
“2024 needs to be the year to embrace APIs for mortgage apply capabilities,” she adds. “I’d like to see more collaboration between lenders, brokers and technology partners to help embrace change instead of having fear of change.
“Is there ever going to be a right time to adopt change? I don't think so.
“But it is our job as a technology partner to evolve, and work with lenders and brokers to provide enhanced journeys to improve the overall mortgage experience, and to ensure support is provided throughout.
David says 2023 was marked by a “huge amount of volatility”, which brought “substantial challenges for brokers and lenders alike”.
This, he observes, happened just as “we thought things were stabilising after the rollercoaster of the Mini Budget and rates were thrown into turmoil once again”.
“Advisers have shown their resilience in testing conditions, where rates shot up once again and product changes went into overdrive,” David continues.
“That has, of course, hit consumer confidence and that will take time to return as borrowers readjust to what the new higher rate environment means for them.”
Looking to the future, David doesn’t think that “we’re out of that cycle of large volumes of product change”.
“But on the more positive side of things, it is now all about rate cuts,” he says.
“It looks like we may have seen base rates peak and the big improvements in fixed rates now feeding through should help more sellers and buyers gain confidence in 2024, as long as there’s no more surprises round the corner and inflation continues to drop back.
“However, it does mean that brokers will have to work harder to ensure customers can take advantage of improving rates.
“There will still be many customers still to come to the end of their current fixed rates in 2024 and they will need the help of their adviser as they get to grips with what is likely to be a shifting rate outlook.”
Richard describes 2023 as “a hard year” for lenders, advisers and distributors, thanks in part to changes such as the introduction of Consumer Duty, The Mortgage Charter, announcements on rental reform, and delays on introducing what was expected legislation for landlords leading to mass uncertainty.
He also points out that over the last year, the market has had to deal with “interest rates potentially having peaked and lenders having to deal with rates bouncing up, down and even sideways, plus criteria, affordability and operational issues at a time when for many their values and volumes are dropping, not to mention a cost of living crisis firmly embedded in the market and all that that brings with it”.
However, Richard says the resilience of the broker community has shone through as they adapted and adopted business practices that meant their customers could get the best deals.
“Perhaps 2023 brought a new reality to our market after the recent ‘Alice in Wonderland’ years,” he observes.
“If, as suspected, 2024 could start off slowly, brokers can work within that environment ensuring the best outcomes for their clients and their business, but ready to take advantage should the market ease later in 2024.”
Richard predicts that Q1 2024 will start off slowly, but after that, he expects the market to begin to open as the economy continues to grow and confidence increases.
“There will be opportunities aplenty I believe in 2024 for advisers to grow their business in many areas,” he says.
“Hopefully, the remortgage market will run alongside the PT market boosting advice and earnings for the broker community, and if affordability eases within many lenders’ models, there should be more opportunities for more customers to purchase a house.
“In terms of a tip, as with this year, those advisers that keep their existing customers and introducers close will win again as this provides momentum to sales if these communication lines are open all through the year and regardless of the length of time of the relationship.
“Being innovative and creative in the messaging to these areas set brokers apart and there is so much creative content available. Brokers that run with this will have a positive year!
“I am keeping an eye on those ‘specialist’ lenders who are looking at the mainstream residential market. I think it’s great they are looking to disturb this area and it will be interesting how they get on and the response from those lenders already in it.”
Craig believes 2023 has been “another rollercoaster for all connected with the mortgage market”, due to high inflation and rising interest rates.
“Swap rates have never been discussed so much between lenders, brokers and customers,” he says.
“The majority of economists had predicted that we had reached a peak in the Base Rate at 4.5% in May, only to then see stubborn inflation and the BBR rise by a further 0.75%!
“Thankfully we have seen things stabilise in Q4, and it does feel at the time of writing this (early December 2023) that we have started to ‘turn the corner’ with swap rates reducing and mortgage pricing improving – long may this continue.
“Affordability has become the number one challenge in 2023, at a time when the Help to Buy scheme came to close, with no replacement (Government or Private) coming to market.
“We have, however, seen lenders innovate and expand their lending criteria – collaboration amongst lenders, builders, brokers and distributors remains key to creating a sustainable mortgage market and opening up homeownership to more potential homebuyers.”
Craig is cautiously optimistic for the year ahead given that the situation has stabilised somewhat, and customers are beginning to readjust their expectations regarding mortgage rates and monthly payments.
Furthermore, he notes that many customers are considering their priorities, resulting in increased activity in the run-up to Christmas.
“Hopefully this continues in the new year,” he says.
Craig adds that key focus areas for 2024 include continued lender innovation, green mortgages with enhanced affordability, and “hopefully some support for the housing market” in the Spring Budget ahead of the general election.
“Another interesting year lies ahead,” he continues.
“The great thing for intermediaries is that the value of independent mortgage advice continues to become increasingly important, helping customers make sense of the broader economic position and what this means to their mortgage and housing decision making.”
Stephanie describes 2023 as “a challenging year” for both consumers and advisers, due to factors such as volatile swap rates, rising and falling mortgage rates, falling house prices and high inflation.
She also notes that consumer confidence has fallen throughout the year, thanks in part to the cost of living crisis and mortgages “frequently hitting headlines”.
“At the same time, we have implemented the largest piece of regulatory change - the Consumer Duty - which as an industry we have started to embed into our businesses,” she says.
“But this is just the start of a journey with recognition there is more to do.
“All this challenge has presented opportunities and with confusing headlines and complex consumer requirements, we have seen the need for advice rise and intermediary introduced business now stands at 90.9% of the UK mortgage market.
“With circa £340 billion (1.8 million customers) in product maturities this year, we anticipated it would be a year of refinance, although the significant swing to product transfers was not predicted but fuelled by affordability changes, fast paced product repricing and little differential in product transfer vs remortgage pricing.
“It’s forecast product transfers could reach £250 billion by the end of 2023, via intermediaries, which is the highest we have seen.”
Stephanie believes the “battleground for success in 2024 is making the most of the new business opportunity through the door, and for advisers to maximise the opportunity within existing client banks”.
“Given the complexity and additional costs of mortgages, alongside the rising cost of living, protecting your existing client bank is now more important than ever,” she states.
“Next year, we anticipate a slower purchase market for definite, especially for FTBs, and we will continue to see refinance over purchase, albeit maybe less of a swing towards product transfers if remortgage product pricing becomes more competitive.
“Depending on which economist report you read, it could be late 2024 or early 2025 before we see the first bank base rate reduction.
“One hope is that we have less volatility in swap rates, leading to consistency and hopefully continuing reductions in product pricing.
“There are 1.4 million customers coming off fixed rates in 2024, which still provides a huge opportunity for advice.
“Our top tip would be to ensure that advisers make the most of every customer appointment, maximising the customers’ needs, offering protection, home insurance, trusts, wills, conveyancing and having trusted referral partners to ensure that you can offer a solution for all of your customers’ needs, which is ever more important in a Consumer Duty world.
Adrian points out that while interest in quality new build homes in great locations remains strong, understandable caution among customers had made it hard to convert this to reservations.
“As a housebuilder , spending more quality time with customers to understand their concerns and present solutions is very important,” he says.
“Some of those solutions arise from the benefits of our energy-efficient, low maintenance homes. However, really great mortgage advice is increasingly a pivotal part of a customer’s decision to buy a new home.”
Adrian states that while interest rates are falling from the peaks of the summer, “more of the same” is likely next year.
“As we move into 2024, we will be considering how we can work more closely with our recommended mortgage advisers to offer more prospective buyers the opportunity to own a home for the first time, to downsize to more suitable property , or to move to a bigger home,” he says.
“From a broker’s perspective, I think it will be important to consider how to engage with customers that are not yet ‘in market’. perhaps because they don’t think that homeownership is within their reach , or don’t know how to get started.
“Finding, educating and nurturing these prospective homeowners will grow a pipeline of future buyers.
Adrian adds that in 2024, he’d like to see the government collaborate with the industry to improve planning, support opportunities to train the workforce of the future, provide a clear path to net zero and consider how they improve the supply and affordability of property.
Nathan is relatively positive about 2023, noting that at a recent industry event, many were of the view that the last year had been “okay”, even taking into account “the obvious headwinds that we’ve faced”.
He says: “Whilst some may argue that 2023 has been far from okay based on the economic backdrop, constant product changes and too many late nights that advisers have experienced, when you consider what happened in Q4 last year, and contextualise this year’s market back to pre-Covid times, it’s an assessment that really resonated with me and feels fair overall.
“Most importantly, the intermediary mortgage market has once again supported thousands of mortgage customers to navigate what has been a particularly complex and challenging market, at a time where getting the right advice has never been more important.”
Nathan goes to note that as a technology provider, it’s been “evident that accessing and maximising the value of robust data remains a challenge for advisers”.
“In a volatile market, being able to mobilise data and distribute different communications to customers more effectively would’ve unquestionably made some businesses more efficient and effective in capitalising on real-time opportunities,” he comments.
“This is an area where we can and want to help more in 2024.
“It’s difficult to see how the market will fundamentally change next year, particularly when you factor in a likely general election, but it feels likely that affordability will be an area where many will be looking to reassess and hopefully innovate.
“Whilst the economic backdrop means it’s especially important that affordability continues to protect customers and lenders, the current rules and approaches continue to preclude many worthy borrowers from taking the ‘correct’ step on the ladder.”
For Neil, bringing lenders and brokers together in person at a series of Mortgage Vision events was “one of the most uplifting highlights for 2023”.
“Bringing so many amazing mortgage professionals together from up and down the country, meeting in person, bouncing ideas around, and learning from each other, created such an exciting buzz,” he says.
Neil wholeheartedly believes that the mortgage industry is firmly still a 'people person' industry, where the best outcomes for borrowers all start from the foundation of great relationships, so “to be able to bring lenders and brokers together, in one space, was fantastic, particularly after the lockdown years”.
“It makes you appreciate the power of collaboration and human relationships even more,” he observes.
As Neil looks forward to 2024 and beyond, he believes that the mortgage industry is at the cusp of a significant transformation on several fronts, including the increase in flow via lender integrations for decision in principles and applications, as well as the use of AI in day-to-day business.
Neil says: “At Mortgage Brain, we recognise that while AI has the potential to bring profound changes, it cannot replace the human element which is core to being a successful, client-focused mortgage broker.
“But there's no denying the potential that AI's powerful data analysis and efficient organisational capabilities present for both mortgage intermediaries, product manufacturers and distributors, including Mortgage Brain and our broader group of companies.
“However, the journey with AI is not without its complexities. Issues surrounding secure data usage, intellectual property, and ethical implications are at the forefront.
“We are committed to investing in the training and development of our teams, ensuring responsible and effective AI utilisation. In this spirit of cautious optimism, we anticipate exploring the positive impacts of AI, while remaining aware of its challenges.
“Our vision for 2024 is to continue the drive for the seamless integration between broker systems and lender mortgage platforms. The current landscape, characterised by disparate technology systems among lenders and brokers, leads to inefficiencies and fragmentation, which in turn impacts the end-user experience and willingness to adopt.
"Whilst we are advocating for an industry-standard infrastructure that fosters best practice connectivity, we realise that this will take time.
“Our solution for 2024 is to share the technology that we have created with our peers for the benefit of the whole industry. This has already started and we are committed to continuing this drive for greater collaboration and ultimately better outcomes for all users that adds meaningful value.”