Navigating the horizon: The broker outlook on residential and BTL applications – Pearson

With views of over 400 mortgage brokers, we’ve gained a rich understanding of their sentiment, concerns, and crucially, their expectations for application volumes in both the residential and buy-to-let (BTL) sectors. 

The findings paint an interesting picture of cautious optimism within the residential market. A significant 50% of brokers anticipate an increase in the volume of residential mortgage applications over the next six months. This positive outlook, outweighing the 35% who expect application levels to remain stable and the 15% who foresee a decrease, suggests a degree of underlying confidence in buyer demand.

This could be driven by various factors, including a potential easing of affordability pressures like the recent changes HSBC UK made to stress rates, increased consumer confidence, or perhaps a response to anticipated shifts in interest rates. 

Interestingly, the survey also revealed that three-quarters, a substantial 76% of brokers, predict a slight decrease in the Bank of England base rate over the course of 2025.

This expectation of lower borrowing costs could well be a contributing factor to the anticipated rise in residential applications, as reduced mortgage payments can make homeownership more accessible for a wider pool of potential buyers. 

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The BTL picture 

In contrast to the anticipated growth in residential applications, views on the outlook for the BTL market appear more subdued, notwithstanding an encouraging start to the year across the overall BTL sector.

Four in 10 (41%) are predicting stability, while a similar number (45%) of brokers expect a slight decrease in BTL application volumes over the next six months. Only a minority anticipate an increase in this sector. This cautious perspective likely reflects the ongoing challenges faced by landlords, including regulatory changes, increased tax burdens, and evolving tenant rights.

The predicted slight decrease in the base rate might offer some relief, but it appears insufficient to significantly shift the overall sentiment on the BTL market. 

The divergence in outlook between the residential and BTL sectors underscores the nuanced dynamics at play within the UK property market. While the desire for homeownership remains a strong driving force, the investment landscape for landlords is subject to a different set of pressures and considerations. 

The business opportunities 

For brokers, these findings highlight the importance of being agile and adaptable.

While the anticipated increase in residential applications presents opportunities for growth, understanding the potential headwinds in the BTL market is equally crucial for strategic planning and client advice.

Staying informed about economic developments, interest rate fluctuations, and regulatory changes will be paramount in navigating the evolving needs of both first-time buyers, existing homeowners, and property investors. 

Ultimately, the next six months promise to be an interesting period for the mortgage industry. While the expectation of increased residential activity offers a positive sign, brokers will need to remain attuned to the broader economic landscape and the specific challenges and opportunities within both the residential and BTL markets to effectively serve their diverse client base.

Our Broker Barometer serves as a valuable indicator, but continuous monitoring and expert guidance will be key to navigating the horizon successfully.