Interest rates have come off their highs off the back of a steady and unmoving Bank Base Rate (BBR), with lenders coming to market with greater confidence and increased appetite, while the Bank of England (BoE) has suggested it expects to reach its target inflation rate of two per cent by May 2024.
Should these conditions continue to prevail, it is likely that the central bank will move to cut the BBR in the second half of the year, helping to drive down swap rates, reduce the cost of borrowing and ease the affordability pressures facing consumers.
This presents a great opportunity for advisers to capitalise on increasing optimism, with falling rates likely to lead to a growth in demand for mortgage advice as those borrowers who sat on their hands and adopted a wait-and-see approach last year begin to return to the market.
Better conditions for borrowers and brokers
Similarly, falling interest rates mean many more borrowers may now be able to meet affordability criteria, enabling them to remortgage away from their current lender rather than having to accept a product transfer (PT) deal.
Not only will this help borrowers secure a better rate on their mortgage, but in some cases, it can also help advisers generate more income by placing the business with a new lender.
This is particularly important, given the fact that figures from the Financial Conduct Authority (FCA) show around one-and-a-half million homeowners are expected to come to the end of their fixed rate mortgage deals in 2024, while those that took out short-term fixes over the last year may also be looking at ways to secure a better rate.
Just over six months on from the introduction of the FCA’s Consumer Duty standard into the financial services market, advisers have also now had some time to adapt to the requirements of the regulator’s expectations and begin to implement any required changes and improvements needed to ensure a customer-centric approach.
This presents increased opportunities for advisers to adopt a more holistic take on the advice process, seek ways to diversify their income streams and tap into other areas of the market by addressing any protection or general insurance needs their clients may have alongside their mortgage.
Whether this means working collaboratively with other adviser firms, or joining a network, Consumer Duty does open up the potential for advisers to address the challenges and barriers, particularly around consumer understanding of protection products but also in other ancillary sales areas.
Is change afoot in the mortgage market?
As we head towards the spring, there is also a growing expectation the Chancellor will announce some key housing and mortgage-related measures at the next Budget, which will take place on the 6 March.
There have been rumours these might include a cut to inheritance tax and the introduction of a new 99 per cent loan to value (LTV) mortgage scheme, while it is also hoped he may consider calls for an extension to the current cut to the stamp duty levy, or even its complete abolition.
Given the notable absence of any measures focused on the housing market in last November’s Autumn Statement, any developments in this area could deliver a considerable boost and give the market a much-needed push forward.
There are many reasons why 2024 looks set to be a better year than last, all of which should instil a greater level of confidence and optimism among advisers working in the mortgage market.
Certainly, this was noticeable, and in abundance, at our recent Kick-Off meetings in January for our appointed representative firms, who presented a much more confident demeanour about what the market could bring them this year.
As the economy hopefully continues to improve and the opportunities in the market begin to increase, advisers – and their clients – should find themselves in a more stable and fruitful environment.
However, it is important advisers make the most of all the opportunities available to them by establishing new relationships and seeking out those right in front of them, particularly if they are members of networks, as this can help them navigate any market challenges they may face and ensure they make the most of all favourable circumstances.
