How would you summarise 2024 and what it’s meant for the industry?
As we reach the end of the year, it’s a good opportunity to pause and reflect, and it’s certainly true that 2024 has been very interesting. Events in the UK and round the world have created both unpredictability and market volatility. A recent example of this was the long-anticipated October budget, which made borrowers and investors hesitate, wondering what it might bring for taxes, interest rates and the economy.
Despite market volatility, in many respects the picture has been positive for the mortgage market. The first quarter of the year (Q1) saw the release of pent-up demand for house purchases, fuelling higher property transaction figures as rates began to drop. Mortgage approvals have risen and the buy-to-let sector has seen a resurgence, with landlord affordability assisted by lender-led changes, alongside lower interest rates.
In terms of borrowers’ needs, 2024 has seen an increase in complex cases, with market challenges meaning the so-called ‘vanilla’ customer is becoming, increasingly, a thing of the past. This is something that lenders must consider in their plans moving forwards, to help ensure they remain relevant and continue to cater for such requirements.
How has Accord Mortgages responded to 2024?
2024 saw many lenders tweaking their criteria to make mortgages more achievable for those struggling to get onto the property ladder. At Accord, we’ve focussed, among other things, on product innovation to deal with some of the issues faced by first-time buyers – such as raising a deposit against today’s backdrop of burgeoning house prices. Our 5K Deposit Mortgage, which we launched in March, was designed specifically to tackle this issue in response to in-depth customer research and insight – and we’ve had some great feedback. We have also made other changes to help those different borrower groups affected by affordability challenges – such as reducing the stress rate we apply to buy-to-let affordability calculations. In these ways, we continue to think outside the box in order to champion the needs of borrowers not always catered for by the mainstream market.
As well as doing the right things for our brokers and their clients, Accord is committed to being a responsible, inclusive and forward-thinking employer, because we understand that having the right values internally translates into what we are like to deal with for our external clients. In the latest example of this commitment, we have recently signed up to the Mortgages Mental Health Charter – which demonstrates our recognition of the stresses associated with working in the mortgage industry and our dedication to developing mental health awareness amongst both our own employees and in the industry in general – something we feel is really important to stand behind, particularly given these changing times.
How do you feel about what 2025 might bring?
There's optimism that the market will grow - figures for the last quarter are really strong and demonstrate that that there is pent-up demand. This may be further fuelled in Q1 by the Stamp Duty changes which come into force in March, which may encourage buyers to try to complete before these take effect. A less positive side-effect of this for buyers, and particularly those purchasing their first homes, is the potential for this spike in demand to cause house prices to increase, pushing them further out of reach for many.
Looking at the mortgage market, there are an estimated 1.8 million fixed-rate mortgages due to mature in 2025, with some borrowers coming off very high rates. Lenders and Brokers alike must focus on how they can best support them as well as other underserved groups - especially given ‘complex’ is becoming the new ‘normal’. The upshot of this is that, in 2025, borrowers will need broker advice more than ever.
And for those in the position of buying or remortgaging in 2025, my advice would be not to wait for interest rates to come down, because they may not, even if that proves to be the longer-term direction of travel. Borrowers should always make their decisions based on what they know is affordable today – rather than focussing on getting the cheapest possible rate. The market is unpredictable, and even though there is talk about there being four Bank Base Rate cuts (potentially) in 2025, these have already been largely priced into mortgage rates. It’s also worth considering that potential increase in house prices, which would wipe out what a borrower might save by waiting for a cheaper mortgage rate.
For brokers, this means reassuring their clients and explaining that it’s about doing the right thing, at the right time for their own individual circumstances, rather than waiting for the market to change.
As for the economy, the most recent budget could lead to inflation staying above 2% for longer, with the Office for Budget Responsibility (OBR) forecasting that it will peak at 2.6% in 2025 before a gradual fall. In the wider world, there are questions around the new Trump administration, such as whether import tariffs might impact the UK economy and the markets.
What can we expect from Accord Mortgages in 2025?
As part of Yorkshire Building Society, we have exciting plans next year which will focus around providing purposeful solutions, such as supporting the underserved as well as those struggling to get onto the property ladder.
Following our Parliamentary launch event in October, we’ll also be continuing to add our voice to the debate around the issues faced by the housing market, raising them with government and industry influencers, and pushing for policy changes which could make a real difference to the sector, and I for one am really looking forward to 2025 and what it might bring.
