Throughout 2024, the UK housing and mortgage markets have navigated a complex and evolving landscape shaped by various economic shifts and significant global events.
As the year draws to a close, the October Budget and the outcome of the US election have introduced new layers of uncertainty. However, a base rate cut has also provided some relief from ongoing concerns.
INTERMEDIARY OUTLOOK
From an intermediary perspective, some cautious optimism arose within the Q3 Mortgage Market Tracker report from the Intermediary Mortgage Lenders Association (IMLA). Overall, the report found intermediary confidence in the outlook for the industry was steady, having recovered from a slight dip following the July general election.
However, brokers’ confidence in their own business prospects showed a slight decline compared to a sharp upturn seen in Q2. The proportion of advisers feeling ‘very confident’ fell from 54% in Q2 to 44% in Q3, while those reporting they were ‘fairly confident’ increased from 43% to 51%. Those who felt ‘not very confident’ rose slightly, from 2% to 3%.
Business volumes also experienced a minor reduction. The average number of mortgage cases placed annually by all intermediaries fell from 96 in Q2 to 92 in Q3. There was a small shift in the distribution of cases, with buy-to-let mortgages falling from 25% in Q2 to 22% in Q3. Residential lending made up 68% of the market, and specialist business remained steady at 10%. The average number of Decisions in Principle (DIPs) that intermediaries processed in Q3 returned towards long-run average levels at 27, down from a peak of 33 in Q2 – a level that had not been seen for two years.
HOUSING MARKET
Additional data from Rightmove also outlined some pre and post-Budget ‘jitters’ but also highlighted plenty of ongoing market resilience amidst signs of renewed buyer activity following the second Bank Rate cut of the year. Looking ahead, Rightmove forecasts a 4% increase in average new seller asking prices for 2025, driven by optimism for lower mortgage rates and pent-up buyer demand. Although, the market is likely to remain price-sensitive, with competition among sellers at its highest level for this time of year since 2014. This means that sellers will need to set realistic price expectations to attract affordability-stretched buyers, particularly as wage growth is expected to slow following National Insurance increases from the Budget.
This combined data set offers some indication of the opportunities and obstacles ahead for borrowers, and how intermediaries will need to stay alert as potentially slower-paced Bank Rate cuts and affordability concerns could still pose challenges in the months ahead.
We have also entered a time of year when we post our annual results, reflect on the past 12 months and look ahead to the upcoming financial year. Fortunately for us, we’ve seen solid asset growth, met our budget targets for net lending and profit, and maintained liquidity with attractive savings rates. This positions us well for future lending expansion in 2025 and beyond.
MAINTAINING A BALANCE
As a member-owned organisation, we strive to balance our savings and mortgage rates carefully, maintaining savings rates even when the Bank Base Rate declines. While this balance is essential for protecting our capital reserves, we’re optimistic that an improving economic outlook will bring greater stability. Like many Societies and lenders operating across the mortgage market, we remain committed to ensuring our products remain accessible throughout all stages of the borrowing lifecycle and continue innovating in a responsible manner.
Within this, our intermediary partners will play an increasingly vital role in helping borrowers access the right solutions for both their present and future needs, achieving sustainable outcomes aligned with their financial goals. And long may this essential and trusted advice process continue to support individuals, households and property professionals in making informed decisions and confidently navigate the growing complexities of the modern mortgage market.
