The year commenced with a flourish of optimism, catalysed by a downward trend in SWAP rates from the twilight of 2022. The initial months of 2023 witnessed lenders paring back their rates, setting the stage for what was anticipated to be a buoyant period in the mortgage arena.
Contrary to the hopeful outset, 2023 unfolded as a year marred by economic strife. The cost-of-living crisis which sparked the resurgence of strikes on a level not seen since the winter of discontent in 1979, escalating inflation, and the Bank of England’s base rate increments – which soared from 3.25% to an unexpected height of 5.25% – rattled the market.
Mortgage providers, caught in the crossfire of these macroeconomic headwinds, adopted a reticent stance on lending.
The ripple effect was palpable; prospective movers retracted, daunted by the tightened screw of mortgage affordability, and even the once straightforward remortgage became a virtually impossible task.
Amidst this landscape, product transfers emerged as the brokerage community’s sanctuary. Yet, as consumers gravitated towards self-arranging these transfers, brokers faced a new set of challenges.
As the final third of 2023 dawned, the tide began to exhibit signs of ebbing. Inflation receded, and the cessation of base rate hikes transitioned from hopeful speculation to tangible reality. A steady decline in SWAP rates ensued, echoed by a concurrent softening of lender rates, breathing life back into the prospects of affordability.
This period of rate reductions cast a spotlight on a perennial concern – the criticality of broker-led guidance.
Clients who had bypassed broker expertise and engaged directly with lenders were often left in the lurch, shackled to higher rates due to a lack of proactive communication from their lenders.
Conversely, our clientele, who trusted us with their product transfers, benefitted from our vigilance; we adeptly navigated them through multiple rate switches as reductions became more frequent.
Now, as the curtains draw on 2023, there’s a palpable sense of anticipation. Inflation continues its descent, SWAP and lender rates are on a downward trajectory, and whispers of three or four base rate cuts in the upcoming year are stirring the market’s sentiment.
The resurgence of enquiries from home movers and the rekindling interest in buy-to-let investments are harbingers of renewed vigour within the sector.
In summary, 2023, with its trials and triumphs, has laid the groundwork for a prosperous 2024. It is a testament to the resilience of the market and the pivotal role of mortgage professionals in navigating through economic challenges.
Craig Fish is managing director of Lodestone
