News Analysis: The New Year Brings a Perfect Storm for Brokers


Rising cost of living, chronic housing shortages and rising inflation were highlighted as key challenges for mortgage brokers in 2022.

House prices are at record highs and mortgage affordability is tightening due to inflation and the looming threat of interest rate hikes. Energy price spikes also put overwhelming pressure on the cost of living for the average consumer and family.

The economic outlook presents hurdles for mortgage professionals, according to Albion Forest Mortgages managing director Mark Robinson.

Keeping in touch with each of these markets is a full-time job in itself

“The rising cost of living will be the biggest challenge over the next 12 months,” says Robinson.

“Lenders will revise their affordability calculators to compensate. With rising house prices across the UK continuing to rise at a blistering pace, borrowers are likely to face rising house prices with reduced lending.

With house prices on an upward trajectory and stagnating household income, the number of readily available properties is also a growing concern among the brokerage community.

“One of the biggest challenges will be inventory levels, as we have a chronic shortage of homes for sale and we are nowhere near having enough homes being built at the same time as an aging and growing population, which is compounding the problem,” said the founder and founder of Shaw Financial Services. mortgage expert Lewis Shaw.

Lenders are starting to design mortgage products for a new era of rising interest rates

“This will likely lead to continued price increases amid tighter affordability and rising mortgage rates.”

Clare Jarvis, broker at the Mortgage Advice Bureau network, echoed that sentiment, adding that the lack of stock is also having an impact on prices, which has led to a significant number of “valuation drops”.

Real estate appraisers are struggling to value properties as buyers enter bidding wars for homes worth well below asking price, she explains.

“Many homes are sold above asking price, so appraisers have a hard time finding sold comparables to back up their appraisals,” says Jarvis.

“Often surveyors return appraisal reports with a value price much lower than the purchase price, which has a significant impact on the mortgage options available to buyers.”

Lenders will revise their affordability calculators to offset rising cost of living

With the threat of rising inflation and interest rate hikes to curb it, mortgage borrowers could start to seek refuge in the fixed rate space, although brokers should also be alert to new products. , says Miranda Khadr, CEO and Founder of Pitch 4 Finance.

“For residential and rental borrowers the obvious path would be fixed rates, but maybe not in all cases and brokers should seek product innovation.

“Lenders are beginning to design mortgage products for a new era of rising interest rates after living in a historically low rate environment for so long,” she says.

Brightstar Financial Group chief executive Rob Jupp said that, overall, mortgage brokers will likely find themselves juggling the pursuit of excellence in traditional product spaces and the transition to multi- products on a variety of media.

“Increasingly, customers have more complex needs that require specialized financing solutions through a variety of channels, including second-charge loans, bridges, specialized buy-to-let and trade,” says- he.

“Not to mention the number of customers whose residential mortgage requirements no longer meet the criteria of high street lenders.

One of the biggest challenges will be inventory levels, as we have a chronic shortage of homes for sale and there aren’t enough homes being built.

“Keeping in touch with each of these markets is a full-time job in itself and it is impossible for brokers to be a single expert in all the options available.”

However, Jupp cautions that as clients become more savvy, brokers should be wary of diversifying before they are ready.

“If brokers choose to go it alone and dive into different areas without the required level of knowledge and experience, clients will continue to become more sophisticated and may just discover them.”

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