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Why I'm more optimistic going into 2024 than i was going into 2023

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Enra-134-modified-1 By Lucy Waters - Managing Director for Aria Finance


Mortgage professionals who made it through the Great Financial Crisis still, quite rightly, wear their battle scars with a sense of pride. Those were tough times indeed.


The year got off to a difficult start, with the market still finding its feet in the wake of Liz Truss and Kwasi Kwarteng’s doomed mini-Budget the previous September.

Swap rates resembled a joyless rollercoaster, recession warnings were coming thick and fast, and inflation and interest rates were soaring. The outlook looked bleak.

I have some sympathy for lenders operating in that environment, given how difficult it must have been to price deals. But at times it felt as though they were playing a game of Hokey Cokey, such was the frequency with which they were dipping in an out of the market.

This made the life even more difficult for brokers, many of whom were already struggling to place cases as rising interest rates hit client affordability.

A degree of calmness and order temporarily returned in the second quarter, with swaps settling and product duration and availability improving.

By the summer it felt as though someone had hit the repeat button: swaps marched higher, and lenders were once again scrambling to protect their profits by repricing upwards.

Fast forward to the present and brokers are having to contend with an altogether different type of problem.

At the start of the year, brokers were in a race against time to secure rates before they disappeared. If they missed the boat, the advice process went back to square one.

Ironically, while mortgage rates are now falling again, the workload remains the same. That’s because brokers are having to repeatedly rekey cases and switch into cheaper rates as they change.

Calling a client to say you have found a cheaper rate is a much better problem to have than breaking the news that they must pay more than they thought, of course.

But ultimately, it means most brokers are doing much more work for the same amount of money and, most likely, with the same cost base as they had the previous year.

Add into the mix that the market is slowing and it’s bound to have a negative effect on profitability right across the sector.

Despite this, I am much more optimistic going into 2024 than I was 12 months ago. The past year has shown that things can change quickly, but it feels as though we are over the worst.

The extent and speed with which interest rates rose last year caught most borrowers by surprise. But after 20 months of rising rates, they are acclimatising.

What’s more, the market is no longer talking about rates hikes. Indeed, the talk has now shifted towards rate cuts, even as soon as Q1 or Q2 next year, depending on who you listen to.

Those predictions may be a little overoptimistic, but there’s no denying that the market is in a more stable position than it was this time last year. That stability should give borrowers more confidence to transact, which should lead to increased market activity.

However, that’s not to say 2024 won’t have its challenges. Mortgage rates remain much higher than they were two years ago, so we shouldn’t expect a full recovery in volumes and property prices.

Challenges still lie ahead but, touch wood, things look and feel a little brighter as we approach the new year. The unpredictability of 2023 was the scary bit, but some calmness has returned to the market.

2024 won’t be a boom year, but I’m confident it will be one of steady progress after what has been a difficult 12 months.

aria (15)

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