Mortgage intermediaries across the UK are being urged to prepare for tougher times as new data reveals a sharp decline in business creation – a trend that could have far-reaching consequences for the property and lending sectors.
Cynergy Bank’s newly released Business Births and Deaths Index, drawing on the latest ONS data, shows that new company formations plummeted to 306,995 in 2024 – the lowest figure since 2017.
At the same time, the average turnover of failing businesses soared, proof, if needed, that even established firms are struggling in the face of rising costs and economic uncertainty.
FRAGILE LIFELINE
While the broader business landscape looks bleak, the real estate sector remains a rare bright spot – for now.
With a Business Health Score of 1.30 – meaning more property-related businesses are being created than closed – mortgage intermediaries may find some solace. However, this resilience could be short-lived as economic pressures mount.
Fewer new businesses often signal reduced demand for commercial properties, office spaces and development projects – all of which directly impact mortgage and lending activity. The knock-on effect could see intermediaries facing a shrinking pool of clients seeking property financing, particularly in the commercial and buy-to-let sectors.
LENDING CHALLENGES
The data also highlights a growing regional divide. London continues to outperform with a Business Health Score of 1.12, surpassing the national average of 1.03.
Yet the East Midlands and Wales tell a different story, scoring 0.94 and 0.95 respectively – areas where mortgage activity may stall due to falling business investment and job creation.
EMPLOYMENT SLUMP
Adding to the pressure, job creation through new businesses saw a net gain of just 13,754 in 2024 – a dramatic drop from the 348,845 net jobs created in 2017. This sluggish employment growth could further weaken housing demand, slow the rental market and reduce mortgage applications.
Nick Fahy, Chief Executive of Cynergy Bank, warned: “These figures paint a challenging picture for the UK business environment. With the National Insurance increase on the horizon, it’s difficult to see an immediate turnaround.
“Nevertheless, real estate remains a crucial sector for growth. At Cynergy Bank, we’re committed to supporting mortgage intermediaries by offering tailored financial solutions and helping their clients secure the funding they need.”
