John Phillips is national operations director at Just Mortgages, one of the largest mortgage brokerages in the UK, with more than 600 advisers working on either an employed or self-employed basis.
Without sounding too philosophical, those in the industry for a while all seem to follow the principle of “this too shall pass”. Through the countless crises, recessions and changes in government over the years, the sector has always shown incredible resilience. Whatever challenges may come, it’s certainly not the first and won’t be the last, and the industry is great at recognising this and adapting accordingly.
While maintaining this guiding principle at the time would’ve taken a Dalai Lama-level of mindfulness, it’s seems to be the case with the ‘mini-budget’. Without reopening old wounds, the ‘mini-budget’ in September completely de-stabilised the markets, sent rates into a frenzy and left brokers facing increased workloads and difficult conversations with customers.
A few months later though, and the picture was already improving with a change in government and policy bringing stability and confidence back to the markets. There’s an argument to say lenders panicked following the ‘mini-budget’ and in turn priced too aggressively. As the market calmed, swap rates dropped and mortgage rates started to trickle back down.
New year, new targets
In fact, even as the base rate continued to rise in the final months of 2022, many mortgage lenders didn’t increase their interest rates, having priced in changes in advance. After all, lenders have money and they need to lend. It’s the only way they make any money, especially as many have left the high street and rely on brokers for their business.
It means there’s plenty of reasons to be optimistic for the coming 12 months, as a new year means new targets for lenders to hit. Less than a month into 2023 and we’re already hearing of regular rate reductions across lenders and LTVs. As the climate continues to improve further into the year, we should certainly expect mortgage rates to continue to drop as lenders open their books and return to a more competitive pricing strategy.
For brokers that have been bearers of bad news in recent months, this is a golden opportunity to reach back out to the customer base and share some positive news. This is especially true for the high proportion of remortgage business that is still up for grabs.
Hopes for 2023
While we cannot be naïve and think it’s all plain sailing from here, the early indicators are encouraging to say the least. Yes the cost-of-living remains an obstacle but inflation is beginning to drop, the stock market is performing well and consumer confidence is beginning to show early signs of improvement. Collectively, we need to nurture this to ensure it’s not just a “new year bounce”.
With around 80 percent of all UK mortgage business arranged through brokers, efforts to strengthen the partnership between lenders and brokers will be absolutely essential too. Not only will this benefit borrowers but it will benefit the wider industry. After all, brokers will be the first port of call as confidence rebounds and borrowers return to the market.
Speaking to our brokers across the county, their hope is for greater innovation from lenders in the coming year. Whether it’s in their products or in their criteria, this will certainly help support those struggling with higher rates or the challenges of remortgaging. Some of their suggestions have included greater support for the likes of ‘Joint Borrower, Sole Proprietor’ or adopting more guarantor-style mortgage products to answer affordability challenges.
As proven by the mortgage industry, the mentality of “this too shall pass” is never an excuse to wait for it all to blow over. Instead, it’s a reminder to roll up the sleeves, crack on with the task at hand and maximise every opportunity. While the new year is still young, there promises to be opportunities ahead for those proactive brokers.