Are you set up for the upturn? – Arena

The experts are expecting the base rate to fall, and when it does, I would expect a positive reaction from consumers and the markets alike.

The markets will gain confidence that a corner has been turned; they feel the rate fall is coming, so clearly an element is obviously priced into swap rates already, but we just don’t know when and how soon, so there will surely be a positive reaction here.

A rate drop will also improve borrower confidence levels, so we can expect a flurry of activity regardless of real mortgage costs, as many borrowers will make decisions based on confidence and feeling rather than the swap rate. Positive press and downward rate momentum should make a difference later this year.

It is likely that the election will take place this year, and this is yet another element of uncertainty. Stability affects confidence, and the more confident the public is, the more borrowing we can expect to see.

Lender margins are expected to tighten as competition for mortgages increases in most sectors of the market. That’s a good thing for the market in general if it is competitive, but there are also other reasons for downward pressure on lender margins this year that may not be so positive.

Subsidised lending schemes initiated through the lockdown for SMEs start to drop off this year, so the cost of funds for those lenders involved will increase.

We’ve seen Tandem scale back already, but it’s not all bad news on that front. There are new lenders active in the sector delivering long-term rates, bringing something different to the table.

These new products will have a totally different pricing and advice angle and are surely helping diversify the market. There are also lenders on the side lines, waiting for their time to enter the market, and that is likely to be some time this year.

Rent charges continue to shoot up at about 10% per year, and we can expect that to continue.

As rates fall and real property prices in some regions also feel the pressure, we will see more opportunities in the buy-to-let (BTL) sector. Is a new and more sensible equilibrium around the corner?

Change is coming, we just don’t know when.

So, what to do?

Efficiency and flexibility will be key. Efficiency isn’t always just about cutting costs, it’s also about making the most of the opportunities in front of you.

At Brilliant, we’re always talking about specialist mortgages where there are plenty of opportunities for those that are prepared to work with businesses like us who are experts in the field, but there are plenty of more ways to generate more income.

The obvious improvements in insurance and protection penetration can also make a massive difference; remember, the cost-of-living crisis is real, but it doesn’t affect everybody.

Great client communications will be something vital. The market will turn, and when it does, it will be incredibly competitive, so knowing who to prioritise and being in a position to contact them through multiple channels and with bespoke messaging will allow you to maximise the benefits.

You can then focus on where you can make the biggest difference. Review your software platforms – not just to help you process your mortgages, but from a marketing and communications perspective.

Look at the wider product sets, too. Consider partners for specialist mortgage areas that are always time-consuming and require a lot of experience. Consider your partners and panels for your insurance and protection too – after all, when time is scarce, you may get better results referring than attempting to do everything yourself.

The right platform and the right partners will allow you to make the most of what is coming, whenever that may be.

Partnerships and new software platforms take time to develop and implement properly – it’s a big investment of your time and money. The reality is that those businesses with the right set-up will leave the competition behind, we just don’t know when…

Practising what we preach

We’ve been doing all this in our business, and it’s certainly a case of short-term pain, but the gain will certainly come. We’ve established partners with software for our own business that will lead to a totally different way of working that will improve what we do and how we do it.

We’ve broadened our product range with other partners, allowing us to deliver a new protection proposition, a game-changing broker client relationship management (CRM) platform and many other new partnerships along the way.

This is a big change for a business that has been solely mortgage-focused for 30 years. It will no doubt take time to reap the rewards, but we’re confident that all those involved, from our partners to the clients of our brokers, will be better off in the long run.

Despite the difficulties, now is the time. Technology is truly enabling: the benefit of genuine partnerships is being realised by all. Let’s not forget that positive change in our sector is also around the corner.

2024 looks set to be a positive turning point for intermediary mortgages. I would recommend all advisers take that chance to ready themselves for what looks to be a brighter future ahead. Then, when the time comes, you can focus on what we all do best: advising clients.