Christmas is approaching and a new year beckons but it’s time to make plans for what comes after the presents and the parties. What should mortgage professionals have in mind for the year ahead?
Confidence is king
With inflation falling and rates stabilising, it appears that, economically, the worst may be over. If the job market stays buoyant and wage growth continues to outstrip inflation, the picture could improve for homeowners, albeit slowly.
The security of regulated advice will be vital next year
While we await interest rate cuts, potentially later in 2024, competitive pressure between lenders should continue to nudge mortgage rates back down.
Furthermore, the supply-and-demand imbalance should prevent a significant house-price slump. In fact, a modest cooling in the UK House Price Index will be helpful for aspirational owners, who’ll benefit from an affordability-boosting combination of falling prices but rising wages.
As consumer confidence slowly returns, we should see more open-market remortgages, fewer product transfers, increased stock, a slightly bigger purchase market and, with it, a healthier housing market.
Political posturing
With a general election looming in 2024, all political parties are likely to leverage housing to win votes.
It’s likely 2023 will set a high-water mark for the proportion of mortgages arranged by intermediaries
A stamp duty reform, inheritance tax changes, a revival of Help to Buy in a new or altered form, rental market reforms, planning policy changes and commitments to build more social, green and affordable housing: everything is on the table.
Every policy change creates winners and losers, however. All we can hope for is a well-thought-out policy, delivered in consultation with the industry and with sufficient notice to plan for implementation.
Doubling down on the duty
The Consumer Duty is here to stay and firms ignore it at their peril. But it creates enormous opportunities for advisers. These include a move to providing holistic, ongoing advice, which will create significant additional advice and revenue potential.
While the outlook for next year may appear scary and complicated, our role has never been more important or necessary
Just as we can no longer overlook the need for more protection and general insurance conversations, we shouldn’t ignore surveying, conveyancing, estate planning, pensions, wills or any other area where we could write, refer or signpost customers towards a better financial future. The Consumer Duty encourages us to ditch brief, product-focused transactions and embrace lifetime relationships with customers.
Diversity delivers
The need for greater diversity is two-fold. In a smaller, more competitive market, ensuring you’re able to fulfil every possible customer need, from new prospects or within your backbook, will be vital for success.
The supply-and-demand imbalance should prevent a significant house-price slump
This means referring what you don’t or can’t write, upskilling where you can, and building lead-generation opportunities from outside your usual sources of business. Whether that requires local partnerships, mutual referral schemes, or better social media and marketing, the opportunity is out there.
Second, the benefits of a diverse and inclusive approach to people within our industry will remain crucial. Next year, I firmly believe, companies that are open, supportive, accessible and welcoming will set themselves up to succeed.
A need for intermediaries
It’s likely 2023 will set a high-water mark for the proportion of mortgages arranged by intermediaries. Increasing uncertainty and complexity, rising rates and the potential financial jeopardy resulting from poor decision making are driving up demand for quality, regulated advice. I predict this trend will continue.
In a digital and connected world, where many are time poor but driven by urgent and often emotional need, the number of potential financial pitfalls into which an unassuming customer can fall is disturbing. The security of regulated financial advice has therefore never been more compelling.
With a general election looming in 2024, all political parties are likely to leverage housing to win votes
So, while the outlook for next year may appear scary and complicated, our role has never been more important or necessary. That is a very encouraging and motivating thought as we prepare to embark upon the year ahead.
I wish you all a productive and fulfilling 2024.
Alex Beavis is group director, mortgages & protection, at Sesame Bankhall Group
This article featured in the December 2023/January 2024 edition of MS.
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