2023, what a year! I struggled with what to write here as normally there are plenty of positives to write about. I think it is fair to say 2023 has not been the best of years, but there are some positives…
Mortgage Rates
Mortgage interest rates have been a bit like a yo-yo this year. After the mini budget last year, they started fairly high earlier in the year. However they did start to come down a little before rising again.
In recent weeks they have been coming down and from peaks of over 6% this year, we are now seeing products coming out under 5%. I think this is in part driven by expectations the base rate will come down next year and a lack of business for mortgage lenders meaning they are lowering rates to get people through the door.
I think if we are looking for positives, the worst is behind us. All being well we will continue to see average rates topping out at about 5.25%. Who knows, possibly coming down a little too if the base rate does drop.
I think my personal favourite was applying for a Product transfer for a customer in October 2022 (yes last year). We dragged it out, switching it 4-5 times. They completed in October this year on a rate of around 3.5%. We applied early as rates were going up and he wanted to secure something as an insurance policy. At the time of completion rates were in excess of 5% and it worked out despite paying the Early repayment charge, they were around £5,000 better off.
Mortgages
This is the tough one, we are around 35% down what we have done in recent years. That is quite a tough pill to swallow. It is not surprising to hear brokers are struggling and some have closed down. It is probably as tough out there as I have seen it since becoming a broker in 2011.
I know that is just a sign of the times and when I refer to mortgages, those are real people who are struggling. We have had a lot of difficult conversations with customers this year who have gone from circa 2% mortgages to maybe 5-6%! Thankfully, we have been able to find solutions for those people. Extending the term, looking at part repayment and part interest only, using the payment holiday scheme to get a little bit of money behind them to put towards the next 24 payments. I am confident all of these will work out otherwise we would have suggesting the downsizing route.
Again, looking for positives… Many of those customers we spoke to around August/September time. Some of those customers we have managed to get the rates down by switching them to lower products prior to completion as and when they come out – that has certainly kept us busy for the last month or 2. The difficult conversations seem to have tailed off now so that is a positive.
There is another side to this however. A lot of our customers have bad credit, whilst the plan was take a 2 year hit on the rates in order to overcome the adverse and then get something more mainstream and in turn lower rates. Many of these customers are used to the higher interest rates and although it is not what was planned it is not as painful as it maybe is for others – some of them are even seeing a drop in their repayments.
Mortgage Success
Its not been a great year, we have noticed a significant drop off on new enquiries. However those enquiries do seem to be picking up this month which is a first as it normally starts to slow down for the run in to Christmas. If you take nothing else from this post… We are going nowhere. If you want a broker for the long term, we will still be here! We are debt free, we have a customers going back for around 9-10 years, we have streamlined our process and are financially sound! We will be here to support you this year, next year and beyond.
Last year we broke the £10m in mortgages for the year, this year I do not think we will hit £7m. Applications have been much harder this year. Affordability has been the biggest issue. Earlier in the year it felt like something needed to give with house prices coming down, rates coming down or incomes going up. Although I am not convinced that is behind us, wages are going up faster than inflation, house prices have come down by around 10-15% and rates have come down by around 1%. It feels like we might be very close to where we need to be for things to level off.
2024
It is difficult to work out what the future will bring. As I write this post we have 2 wars going on, a virus still being a nuisance, interest rates higher than most people are used to and a recession on the cards. But despite all of that, I still feel like it was worse in 2007. As interest rates do seem to be coming down, that can only help.
With my pessimistic head on, I cant help but feel like it needs to get worse before it gets better.
However, lets try to be positive. Interest rates appear to have levelled off. House prices are coming down gradually and incomes appear to be on the increase so hopefully by Q2 (March-June) time we might have found some equilibrium and we can start to get back to some sort of normal.