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2023 mortgage market starting to gain momentum – Clifford

by: Rob Clifford, chief executive of Stonebridge
  • 31/03/2023
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2023 mortgage market starting to gain momentum – Clifford
We now have the ‘final word’ on the mortgage market in 2022, with UK Finance’s latest Household Finance Review revealing full-year figures for gross lending, house purchase, residential, product transfer numbers, and mortgage arrears, possession numbers.

The trade body describes the UK mortgage market as having seen ‘subdued growth’ throughout 2022, however many will be reading this wondering what might have been, had we not seen the spike in rates and the consequent dampening of demand as a direct result of the mini Budget. 

Even ‘subdued growth’ shows that gross lending for the year was still up 1.9 per cent on 2021, moving from just over £308bn to just under £314bn.  

And while the total number of purchase loans for first-time buyers, homemovers and landlords were all down on their 2021 figures, UK Finance describes purchase activity in the last three months of the year as having held up fairly well. 


The road to recovery 

Indeed, the recent Mortgage Market Tracker report from trade body counterpart, Intermediary Mortgage Lenders Association (IMLA), suggested the sector was recovering well after the mini Budget, with adviser caseloads holding steady and intermediary confidence levels only slightly down quarter-on-quarter. 

And, again highlighting what appears to be a growing strength and solidity in the market, the most recent Royal Institution of Chartered Surveyors (RICS) Residential Survey shows a decent improvement in new buyer enquiries, with what it calls a ‘less adverse trend in the volume of fresh listings’, plus an improvement in the agreed sales indicator.  

Those 2022 figures, and what many in the industry have witnessed over the first 10 or so weeks of the year, certainly chime with our own experience of the marketplace and the levels of activity we are seeing from our member firms. 

At our recent National Conference, we announced that 2022 had been a record year for Stonebridge, in terms of mortgage lending, having hit £12.6bn. What was also important was our ability to see lending increasing in 10 out of those 12 months last year, even if the mini Budget’ did inflict some damage. Which I’m sure would have been the case for most practitioners during that period. 

We know that the end of last year in terms of demand, enquiries, and activity was not exactly record-breaking, and given the time it takes for deals to complete, the numbers would be impacted in the early part of the year.  


A refinance refocus 

However, while it’s also true to say that 2023 did start off slowly, as the trade bodies are acknowledging in their reports and reviews, the slow start has disappeared and we have seen a noticeable uptick across all key metrics, which given we are now in the spring season, should continue to see more improvement. 

And I think we can be sure of the growing importance of the remortgage market for advisory firms both right now and throughout 2023. While UK Finance figures show external remortgage numbers for residential borrowers falling from 321,800 in 2021 down to 192,400 in 2022, the entire market continued to see a slight two per cent uptick in residential product transfers (from 1,247,700 to 1,272,200). 

I’ve talked before about the vast amount of product transfer (PT) business and what it could mean for adviser income levels, which remains a real factor, but I am minded to think that, with a more competitive mortgage market starting to reappear, advisers can expect attractive remortgage options for their clients, rather than simply having to advise the client to accept the PT deal from their existing lender. 

Any client coming to the end of their deal presents a considerable opportunity for a full financial review, including protection, insurance, and all other needs. Given the importance adviser firms should be placing on customer refinancing this year due to reaching product expiries, it’s imperative they make the most of this with every client. 


A sense of momentum for 2023

Overall, it is still early days for the 2023 UK mortgage market, but there is a sense of momentum, and certainly the further we move away from those darker days of last September, the more our sector begins to show the buoyancy we have come to expect. 

Notwithstanding some potential bumps in the road to come, I think it’s possible to see a progressive 2023 which will deliver growth opportunity for mortgage advisers.

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