How brokers should prepare for hard-pressed homeowners and the ‘new normal’

Brokers need to prepare for working with hard pressed mortgage holders this year as the pressure on households shows little sign of abating.

David Hollingworth, associate director of communications at L&C Mortgages, said it is imperative that brokers prepare well for the year ahead as they will need to help customers find solutions to a host of difficult circumstances carried over from 2022.

“Advisers may be able to offer little help to those in the tightest predicament, but they can at least help to direct borrowers to speak to their lender sooner rather than later,” Hollingworth said.

Hollingworth also believes that lender forbearance may well be called on more regularly in the months to come. 

Risks and benefits of mortgage payment holidays

“The pandemic brought an attempt at a universal approach to help borrowers through the initial impact of lockdown in the shape of payment holidays,” Hollingworth said. These were available on demand and designed to give some short term breathing space from payments.

However, Hollingworth believes that the current issues may not be so short-term, so payment holidays could risk leaving some in a worse position if the economy slides into recession. 

Hollingworth believes that, as a result, lenders will no doubt be preparing to help borrowers find a suitable plan on a more individual basis, and added brokers would do well to prepare thoroughly for the difficult year ahead.

He added that debt advice charities may also be useful to signpost for those anxious about talking to their lender.

Interest rates – the new normal

Lee Moran (pictured), business development manager for TAB, believes 2023 will be a tough year for customers, as far as interest rates go.

“The Bank of England base rate is north of 3% and is likely to hit 4% soon. This is the highest the base rate has been for 10 years, and it is proving challenging for some borrowers,” Moran said.

While Moran believes it is unlikely the base rate will come down any time soon, he expects to see it settle in 2023 as inflation and the economy do the same. 

“Lenders, brokers and borrowers should remain positive,” Moran said. “We have seen higher rates before and it will just be a matter of adjusting and getting used to the new normal.”

Having said that, he added, higher rates, along with the cost-of-living crisis, will affect house prices, probably to the tune of a 10% decline in some areas. 

House prices: under pressure, but difficult to predict

Homebuyers and property investors are being more pragmatic when deciding whether to buy new property, which Moran believes will inevitably push down prices for certain categories of property. 

However, for the properties where values are falling, Moran does not believe prices will be in decline for long, and there are other areas where he thinks house prices will increase. 

“As we have seen over the past few years, specific types of properties can increase in value if there is the demand for them, even if prices are falling in other parts of the market,” he said.

At the start of the pandemic, for example, Moran said, people wanted gardens and larger spaces while inner-city locations were not in high demand, with prices shifting accordingly. 

“I would like to see some government support introduced to assist the market through 2023. The last stamp duty cut for first-time buyers helped keep property sales buoyant,” Moran added.

He said a similar scheme, combined with a push for new build developments and PD conversions, would boost supply and demand, keeping the property market moving.

Are you expecting a difficult market for consumers in 2023? Let us know in the comment section below.