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Reflections on 2023

2023 was a roller coaster for all connected with the mortgage market, all hinged on inflation and the knock-on effect to interest rates – swap rates became a key topic of discussion amongst lenders, brokers and customers! The majority of economists had predicted that we had reached a peak in the Base Rate at 4.5% in May, only to then see stubborn inflation and the BBR rise by a further 0.75%, thankfully we saw things stabilise in Q4 with lower-than-expected inflation.

Affordability became the ‘number 1’ challenge in 2023, at a time when the Help to Buy scheme came to an end, with no replacement (Government or Private) coming to market. We have however seen lenders innovate and expand their lending criteria – collaboration amongst lenders, builders, brokers and distributors remains key to creating a sustainable mortgage market and opening up homeownership to more potential homebuyers!

Close up of blueprints for a newly built home with building tools

Expectations for 2024

Several leading industry commentators are forecasting a ‘fairly flat year’ for 2024, however I am slightly more optimistic given things have stabilised (for now) and customers are beginning to readjust their expectations regarding mortgage rates, monthly payments, along with considering their priorities, resulting in increased activity in the run up to Christmas – hopefully this trend continues during the new year!

The value of independent mortgage advice continues to become increasingly important, helping customers make sense of the broader economic position and what this means to their mortgage and housing decision making – playing to the strengths of intermediaries.

Key things to look out for during 2024 include:

  • House prices did not significantly drop during 2023 and appear to have stabilised.
  • The tide appears to be turning as swap rates continued to fall in December, resulting in a number of lenders now offering sub 4% mortgage product, not seen since before the mini-budget in 2022!
  • The pending launch of the Own New ‘rate reducer’ proposition – this is an exciting bit of innovation, which is certain to drive enquiry levels and sales!
  • Further lender innovation, particularly with enhanced affordability on more energy efficient new build homes.
  • We may see major housebuilders return to the market with their own private Shared Equity schemes (via a joint venture / partnership).
  • The rise of Shared Ownership via housebuilders and private providers.
  • Will we see a national roll out / expansion of the First Homes scheme?
  • Spring Budget (6th March) – following very little announcements in the Autumn Statement, it will be interesting to see what support the chancellor offers for the new build and / or broader housing market…
  • General Election – housing is likely to be a key ‘battle ground’, and again It will be interesting to see what appears in the political party manifestos…

Many of you will have heard me say before “there is never a dull moment in the New Homes sector”, and the above highlights just that – I look forward to continuing to support you and the broader sector in 2024.

Happy New Year and I wish you every success in 2024.

Craig Hall, Director, New Homes – LSL Financial Services

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