Expert Insights: Is the landscape improving for brokers?

Market Update
Simon shared his insights on the macroeconomic landscape and what it means for the market, brokers, and customers — with the upshot that the environment is looking much more positive than it has for some time.

Over the course of the year, swap rates have become much more stable, with the outlook for the base rate becoming more predictable. Reduced volatility in rates, alongside less variation in mortgage pricing, is providing increased certainty for customers — ultimately leading to less re-work for both brokers and lenders.

We have seen the base rate start to reduce, and should this momentum continue, we can expect to see improved affordability too as lenders increase the amount they’ll lend to customers — providing a tailwind as rates reduce. Meanwhile, the House Price Index returned to growth in July and August this year, inflation has dropped broadly to the 2% target, and consumer confidence is on the rise.

The number of homes for sale is now at a seven-year high, which is a positive indicator for the coming year. In 2024, purchase has been the driving force behind the market’s growth, while remortgage activity has remained stable.

Looking ahead to next year, Simon suggests the remortgage market is key to provide the momentum needed for market growth, particularly as customers come off their higher rates and potentially look to break out of fixed deals to secure lower rates.

The current outlook for the mortgage market is positive. There has been a return to growth this year: the market grew by about £10 billion in the first half of 2024, with around £20 billion in growth expected for the full year. But with average growth in the market typically at £40-50 billion annually, there’s still room to run.

The evolving role of the broker
Frances Cassidy, our Head of Mortgage Intermediary Partnerships, sat down with Robert Sinclair, CEO of Association of Mortgage Intermediaries, to discuss some of the changes he has seen during his distinguished career, and the landscape for brokers today.

Over the course of his many years in the industry, the role of the broker has transformed. Regulation has ramped up and is now a far more demanding part of the job, and the general product landscape has changed significantly. As a result, today’s advisor needs to have much more in-depth knowledge and a greater awareness of what’s going on in the industry.

The most successful advisors, according to Robert, are those that work empathetically to truly get at the heart of clients’ needs — which are increasingly challenging. Today’s customers bring a set of complex circumstances, from variations in employment and income sources to nuances around self-build projects or shared ownership.

One of the biggest shifts in the industry that Robert has observed during his 16-year tenure at AMI has been around the relationship between lenders and brokers. Whereas once the two worked quite distinctly, and could even be adversarial, there is now a far healthier relationship where lender and broker can work together as partners.

Of the landscape for brokers today, Robert described a varied picture across the country: while there is a great deal of positivity, there are areas in which the market remains quite static. Overall, brokerages have been faced with falling incomes over the past several years. According to data from the Financial Conduct Authority¹ , average firm income fell 10% from 2022 to 2023, and a further 5% decline is expected from 2023 to 2024.

In the face of these revenue challenges, brokers have had to innovate to backfill the gaps, with some looking to increase protection sales. While the rest of 2024 is likely to remain challenging from an income perspective, Robert said he expects to see business pick up in 2025.