By Lucy Waters - Managing Director for Aria Finance
In China, the bamboo tree has long been seen as a symbol of patience and perseverance.
Even if you planted a seed today, fertilised the soil and watered it regularly, it may be at least five years before any sprouts begin to emerge.
However, once a bamboo tree starts growing, it grows fast - as much as 80 feet in six weeks.
In other words, you need to be patient, but eventually that patience is rewarded.
This metaphor feels very apt for the current state of the UK mortgage market. It has been a difficult couple of years, but history tells us that the market will eventually come good again.
Though if the past 18 months are anything to go by, the ride may be a little bumpy before we return to something resembling a healthy market.
The year started on an optimistic note: Swap rates were falling, borrower enquiries increasing and everything seemed to be ramping up again.
Unfortunately, that didn't last. By the start of the second quarter, Swaps were once again rising, originations slowed and, since then, the market has tread water.
Twenty years in this industry has taught me not to dwell on the negatives too much and to appreciate the positives when they arise.
In that vein, there is no denying that the market is in a far better place at the halfway point of 2024 than it was a year earlier.
In the residential market, volumes are up 26.8% year-on-year for first-time buyers and 20.4% for homeowners, according to UK Finance.
What's interesting is that the number of product transfers fell 10.1% year-on-year to 120,580 in April, while the number of remortgage cases remortgage cases spiked 48.2% to 28,370.
While the total number of PTs and remortgages is down nearly 3% year-on-year, the fact remortgages have grown so much will be good for brokers' top lines. This is a welcomed developed, as for the past few years the rise of PTs has meant brokers have had to do virtually the same level of work for less pay.
Even in the buy-to-let market, which has felt the brunt of the pain from higher rates, things are looking far rosier, with purchase volumes up 29.5% year-on-year and remortgage volumes by 48.5%.
That said, there is a long way to go. Despite the improvement these past 12 months, there remains much less of what I would call 'aspirational borrowing' compared to when rates were lower.
It feels as if the only borrowers who are acting are those who have no other choice. By that I mean, landlords who rely on their portfolios to make a living, those forced to move for work or borrowers acting to avoid their lender's eye-watering SVR.
With rates static for nearly a year, it feels as though most borrowers are waiting for borrowing costs to fall before taking action. This has been the case for a while.
Going into 2024, the consensus was that we would see three - perhaps even four - rate cuts this year. But now we'll be lucky to see two.
While inflation is back at the Bank of England's 2% target, core inflation, which strips out volatile food and energy prices, and wage growth are still running hot.
These are the measures the BoE cares most about, and it's unlikely to make a move until both are much nearer to 2%. When that will be is anyone's guess, but I would say at least a couple of months.
Let's not forget also that there is always a lag between a rate cut and an uptick in activity, meaning a full market recovery may be anything up to a year away.
That, of course, assumes that interest rates come down to around 3-3.5% and mortgage rates fall to a level where people think transacting is worth it again.
I am positive that will happen at some point in the near future but, like the bamboo tree, we may need to be patient for a while before we are rewarded with a more buoyant market.
