Mortgage Advice Bureau Market Review

In their accounts for the year to 3 December 2023, Mortgage Advice Bureau provided the following market review:

Market review

The fall in new mortgage approval volumes in the aftermath of the September 2022 mini-budget continued throughout 2023, as the rising costs of living and higher interest rates created further affordability constraints and reduced consumer confidence. After a much-depressed Q1 2023, with mortgage approvals 40% down year-on-year, Q2 saw a slight improvement (down 26% year-on-year). However conditions toughened further in Q3 2023 (down 41% year-on-year) and this continued into Q4 (down 13% year-on-year despite Q4 2022 being heavily affected by the mini-budget). Overall, new mortgage approvals were down 32% for 2023, as summarised in the graph below.

Source: UK Finance

This led to gross new mortgage completions(1) being down 29% to £223.5bn (2022: £313.2bn(2)). The purchase segment was down 30% and the re-mortgaging segment down 29%, as illustrated in the table and graph below.

UK Gross new mortgage lending by segment, £bn
2023 2022 %
Residential purchase 121.1 168.2 -28%
Buy-to-let purchase 8.2 17.4 -53%
Purchase segment 129.3 185.6 -30%
Residential re-mortgage 65.2 82.2 -21%
Buy-to-let re-mortgage 19.8 38.0 -48%
Re-mortgage segment 85.0 120.2 -29%
Buy-to-let segment 28.0 55.4 -50%

Source: UK Finance

Source: UK Finance

Whilst affordability pressures restricted the external re-mortgaging sector during the period, Product Transfers saw a 21% increase by value.

Property transactions were down 19% in 2023 compared to 2022, as illustrated in the graph below. The smaller contraction relative to mortgage lending volumes indicates an increasing proportion of cash buyers, with higher interest rates putting cash buyers in an increasingly favourable position to those taking out a mortgage.

Source: UK Finance

The value of mortgage lending was also impacted by average house prices starting to fall from the peak reached in H2 2022. Average house prices in 2023 were down 2% compared to H2 2022, and flat compared to average prices in 2022 as a whole.

The share of UK residential mortgage transactions via intermediaries (excluding Buy to Let, where intermediaries have a higher market share, and Product Transfers where intermediaries have a lower market share) continued to grow to 87% (2022: 84%), with customers increasingly needing choice, advice and support in a more complex and uncertain macro environment. We expect this increased intermediary market share to remain stable.

UK Finance’s and the Intermediary Mortgage Lenders Association’s latest estimates of gross new mortgage lending for 2024, published in December 2023, are £215bn and £205bn, down 4% and 8% respectively compared to 2023.

However, the Group’s current trading and the latest market data would indicate that actual numbers may end up higher than these forecasts. Despite the continuing headwinds, the underlying level of demand for home ownership and mortgages remains strong, and we expect activity levels to be notably stronger this year. We also expect external re-mortgaging to make up a greater share of re-financing in 2024, even though Product Transfers will remain strong.

(1) First charge mortgage completions, excluding secured personal loans (second charge mortgages), later life lending mortgages and bridging finance.

(2) UK Finance regularly updates its estimate of gross new mortgage lending, and previously reported £313.9bn at the time of our 2022 results.




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