Affordability, tech and communication key themes for 2024 ‒ Beddall

The mortgage market encountered tricky challenges last year, grappling with the impact of the cost of living crisis and a volatile, high interest rate environment.

Navigating such an uncertain and ever-shifting environment became a demanding task for brokers and borrowers whose dream homeownership goals quickly felt unattainable. However, as we greet a new year, there is a notable sense of optimism and hope in the air.

With interest rates remaining stable and inflation at four per cent, a glimmer of light at the end of the tunnel is becoming visible. While we’re not entirely out of the woods yet, this year presents opportunities for brokers to demonstrate their knowledge of what’s to come in the year ahead, and ability to support clients to get them back on steady footing and achieving their homeownership dreams.

Affordability challenge continues

The economic reality of 2023 has no doubt taken a toll on borrowers across the country, leaving many struggling with their household finances and facing affordability issues. The latest figures from Registry Trust reveal that the total number of judgments registered against consumers increased by 15.7 per cent, from 193,670 in Q3 2022 to 224,152 in Q3 2023. As this squeeze on affordability continues, access to support will be more important than ever.

However, our own research found that one in seven UK adults would be too embarrassed to seek financial support should they need it. The industry has a key role to play in supporting those who are embarrassed to talk about their finances. For brokers, this involves creating a safe space for their customers to discuss their unique situation, while for lenders the focus should be on education to help increase people’s financial awareness.

Additionally, we are witnessing increased innovation in the types of products offered by specialist lenders as the industry grows and prices become more competitive. Schemes such as Deposit Unlock and product transfers (PTs) are already surfacing in the market to help aspiring homeowners climb onto the property ladder or keep up with their mortgage payments.

Tech innovation

As the lending landscape becomes more complex and customers demand more efficient processes, technology will have a huge role to play in ensuring brokers and lenders are working safer, smarter, and faster to serve their customers.

For lenders, one way to stay ahead of the curve is by taking advantage of automation such as Open Banking. These technologies not only improve operating efficiencies but enable lenders to gain a deeper understanding of the end customer. This will allow customers to securely share their data between the adviser and lender, which will ultimately improve the speed of the application journey, resulting in quicker lender decisions and better customer outcomes thanks to the power of data.

Turning challenges into opportunities

While we are seeing, and feeling, more optimistic about what lies ahead this year, we must remain vigilant and pragmatic about the challenges in the market. Brokers and lenders must be well-positioned to help their customers navigate these difficult conditions and reach their homeownership goals.

Communication will be increasingly important in the months ahead, both from a lender and broker perspective, to ensure their clients understand how the current market conditions impact their mortgage payments and are aware of the support available to them. Whether a borrower has complex or adverse credit, it’s our duty to remind them that there is support available so that they can make their homeownership dream a reality.