On 30 November, IPFA (Industry Panel for Financial Advice) in partnership with Aldermore and Sesame Bankhall Group held a Supper Club in London with advisers and brokers in attendance to discuss a wide range of topics around the current cost of living crisis including the state of the market, the outlook for 2023 and how the crisis has shaped the broker’s role.
While the weeks following the mini Budget saw rates rise, products plummet and lenders lament, recent weeks have undoubtedly been smoother in the wake of Liz Truss’s resignation and the relative stability that was brought by the Autumn Statement.
However, according to our broker panel, it has still been a tough time for the past few months for everyone from first-time buyers to seasoned landlords.
First timers taking their time
One broker who works in the new build sector said: “I think it really depends on the area in which you work, but in my sector, things have not massively improved.
“A lot of people are waiting until next year. First-time buyers are looking for a larger deposit and waiting for prices to come down. Especially as Help to Buy (HTB) ended in October.”
When asked about incentives and replacement which could fill the gap vacated by HTB, the guests noted several options but highlighted that they had yet to reach maturity.
An attendee said: “We have replacement schemes coming through but they are just not fit for purpose. We’ve got Deposit Unlock, we’ve got First Homes and we’re waiting for the private shared equity schemes. But we definitely need more.”
She explained that she’d seen a ‘massive rise in interest for shared ownership but not at the lower end of market, where you may expect’.
She said: “We are dealing with shared ownership at the £600,000 to £700,000 level, which is not the market you would think about for shared ownership.”
Others noted that it was not only first-time buyers who were postponing purchases but movers and remortgagors.
One adviser noted: “With remortgages, people are just uncertain, they are not sure whether to wait or whether to go now. The confusion often comes from the mixed messages in the press.”
Media misinformation
This point about misleading media muddling the market was echoed by the majority of the panel. Most believed that the media has been too slow to report the return to stability.
One broker said: “We need better national sentiment. Our customers all saw the [original] media coverage. No one is reporting that rates are coming down.”
Another noted that “change had become the norm, especially during Covid” and that “everything had settled down but the media just wasn’t reporting on it.”
Ultimately, according to one adviser, the media and, indeed, brokers themselves needed to get the more optimistic message out to the public because only that “was going to help consumer confidence”.
BTL blues
However, one sector which is still ‘a major area of concern’, according to guests, is the buy-to-let market.
One said: “Recently it has fallen off a cliff. Why would anyone look to purchase? The stress tests are so high.
“And the legislation that the government is bringing in around Energy Performance Certificates (EPC) and making it harder for landlords to get rid of tenants will hurt the market more.”
Another attendee noted that they were looking to lenders to provide assistance but had seen very little as yet.
She said: “We are waiting for innovation from some lenders to help existing landlords. I spoke to one lender who said they are working on it. But there is not much going on.”
However, one broker who works in the new build sector did highlight that her firm “had seen a big increase in landlords purchasing on new build sites because of EPC issues.”
Back to the future
For many of the panellists, the outlook for 2023 was quietly upbeat although there were several caveats, particularly around the rise in possessions and arrears.
Most attendees agreed that the cost of living crisis would result in a rise in missed payments and repossessions.
One broker said: “According to a recent survey, 51 per cent of people will only be able to afford the essentials. None of us have lived through something like this. People telling us that they won’t be able to afford gas bills or pay their mortgage.”
Another highlighted that a specialist lender had moved into the residential market with a range aimed purely at those with individual voluntary arrangements (IVA), county court judgements (CCJ) and missed payments.
She said: “As an astute lender, it sees the way that the market is going. The lender never had a residential product and now it’s come up with this range.
“When you look at the range the lender is offering, it’s great for those who need it but the rates are astronomical. It’s sad but they need it.”
A stable market in 2023
However, despite this more pessimistic outlook for possessions, most brokers felt that 2023 would see the market stabilise, although the majority felt that the upswing would come in the second half of the year.
One broker said: “We’ll have a tough first quarter. But I see a healthy end and I also see big opportunities from brokers to give proper advice.
“I think by the end of next year, inflation will be under more control, so probably Q3 and Q4, we’ll have a relatively healthy market.”
Others were even more specific on when they hoped to see a turnaround.
A representative of Aldermore said: “March is pivotal as inflation should start to come down by then. If it doesn’t, then we could see the base rate go up again.”
A broker agreed, saying: “The crucial moment is that March/April period. If inflation has started to tick down by then, the market will settle that bit more.”
As far as predictions on house price falls, the range around the table was between three and eight per cent, while the forecast for the peak base rate was around 4.25 per cent.
However, the overriding message was one of cautious optimism for brokers in 2023.
As one guest put it succinctly: “Our opinion is that we’ll turn the corner in 2023.”
In attendance
Alex Beavis, group director of mortgages and protection at Sesame Bankhall Group
Stephanie Charman, strategic relationships director at at Sesame Bankhall Group
John Cowan, chairman of at Sesame Bankhall Group
Caroline Mirakian, head of national accounts at Aldermore
Jon Cooper, head of mortgage distribution at Aldermore
Gemma Perry, sales manager at Acumen Mortgages
Dean Vellender, director of Easylife Alliance
Gary Godwin, sales operations manager at Fairstone
Tracy Gordon, director of operations and compliance at Mortgage Required
Tim Atkinson, managing director of Mortgage Required
Craig Head, director of Mortgage Required
Adam Kemp, independent financial adviser at AMAS
Rebecca Lewis, group director at Affinity
Rick Marshall, director at Affinity
