If you ask anyone who writes articles in the trade press, I’m pretty sure that their main aim is to stay positive, add some insight when and where possible, and remain positive.
I realise that I repeated myself but such is its importance. However, we also have to remain pragmatic and we certainly shouldn’t ignore how challenging it currently is for many existing and potential borrowers with additional burdens being placed on an array of financial scenarios.
For example, first-time buyers may be having to dip into hard-earned savings simply to cover a mix of rising rents, energy bills and grocery bills. Homeowners whose mortgage terms have come to an end are likely to be suffering from a substantial rate shock and that’s on top of the aforementioned hikes in living costs. Landlords and investors may also be suffering from increased mortgage repayments whilst also supporting some tenants who may be falling into financial difficulties of their own.
Inevitably, rising borrowing costs as well as heightened inflationary pressure have led to reduced activity across the housing and mortgage markets over the back end of 2022 and into 2023.
To underline this impact, a recent survey from RICS covering December activity levels suggested that – at a national level – the net balance reading for new buyer enquiries came in at -39% (down marginally on a previously monthly figure of -38%), signalling an ongoing weakness in new buyer demand across the UK.
Alongside this, the number of fresh property listings coming onto the sales market also fell, with the latest net balance of -23% representing the weakest return for this indicator since September 2021. Agreed sales across the country reported a net balance of -41% among survey participants, indicating a further decline during December from the figure of -36% reported in November.
This downward sales trend became clearer across virtually all parts of the UK over the month, with respondents in the North West of England, Scotland, Wales and London all citing a particularly quiet month for activity.
So what can lenders do to help stimulate activity?
The simple answer is to provide the market with responsible, viable, competitive and accessible options where possible. This isn’t always easy but, on an encouraging note, there has been a keen sense of anticipation amongst borrowers and the intermediary community around how lenders will approach Q1.
A factor which was built around many potential buyers and homeowners adopting a wait and see attitude over the later part of 2022, a factor which was inescapable during those uncertain economic times. However, it’s fair to say that we are now operating on some firmer footings from a lending perspective and events in Q4 demonstrated just how robust and resilient the UK housing and mortgage markets are in the face of wider economic adversity.
As a mutual, we have to appreciate what kind of economic landscape we are operating in and how this is impacting our community, not just our borrowers. Having said that, we are also a lender who relies on the intermediary channel to generate business far beyond our local community. Meaning we have to ensure that we listen to our customers and intermediary partners on a local and regional scale to help define our lending proposition moving forward in order to successfully meet any pent-up demand and ever-shifting borrowing needs.
A flexible manual underwriting processes will prove more important than ever in doing just that, and I’m positive that Hanley, alongside a host of other lenders spread across the mortgage market, are doing their very best to stimulate more purchase activity in Q1 and beyond.
David Lownds is head of sales, marketing & business development at Hanley Economic Building Society Â
