Understanding the bigger picture: opportunities in the UK mortgage market

24 August, 2023Joshua Downes

UK homeowners have faced some tough times recently, as soaring mortgage rates have placed some under significant financial strain. At the same time, the cost-of-living crisis has pushed the dream of homeownership out of reach for many saving for a deposit. So, what does this mean for the UK’s mortgage industry?

John Somerville, LIBF’s Head of Financial Services, and Gordon Reid, Learning and Development Specialist – Financial Services, assess the current state of the market, look back at some of its previous peaks and troughs and discuss why the recent downturn could augur substantial opportunities for skilled advisers.

The UK mortgage market today

In 2023, UK mortgage rates hit their highest level for 15 years. Costs soared as lenders faced uncertainty over inflation and the interest rates set by the Bank of England. This has spelled bad news for the finances of potential homebuyers and existing homeowners who are coming to the end of their fixed terms.

But while buyers and existing owners will welcome recent news that several major lenders, including the Halifax, Nationwide, and HSBC, have cut interest rates on new deals, Somerville warns that we “aren’t out of the woods yet."

“The reason [for lenders cutting rates] is that they are taking a very, very long-term view of the market and it's nothing to do with actually the here and now. So those rates may change again and again – because we don't know what the ongoing effect of these changes is going to be.”

This, Somerville notes, is where a good, skilled mortgage adviser can really provide value, as they “will understand the whole picture and, just as importantly, they will be able to help their clients to better understand the choices they make with regards to their mortgage.”

How the industry has shaken off previous crises

Both Reid and Somerville are also quick to point out that the UK mortgage market is no stranger to difficult times.

“In the early 90s we saw the cut from the European Exchange Rate Mechanism,” says Somerville. “Interest rates flew up through the roof and property prices crashed – proportionately it was considerably worse than what we're experiencing now. Yet literally within two years, house prices had recovered.”

Reid also remembers those days: “I was a manager of a building society at the time and we were literally getting keys to houses through the letterbox,” he says. “Back then, property prices had dropped to such an extent that often people's mortgages were bigger than their properties were worth. They couldn't afford their mortgage and they couldn't sell it either – but the market recovered in a relatively short time.”

Of course, the 2008 financial crisis was also a difficult time for homeowners. But Reid notes that “it wasn't as bad as the early 90s because there weren’t the issues around equity” – something, he notes, that is also true today. “Most people, unless they've purchased in the last 12 to 18 months, are going to have equity in their property,” he says.

“So, we've experienced issues several times in the past and the markets have always recovered and grown beyond where they were previously,” adds Somerville.

Why now is an opportune time for mortgage advisers

Somerville and Reid firmly believe that there is plenty of opportunity ahead for mortgage advisers – particularly those who have an in-depth understanding of the wider market and can meet more complex customer needs.

“People are desperate to get a good deal on their fixed rates. There’s a lot who are looking to remortgage. There’s also massive pent-up need in the housing market due to the shortage of housing stock. And if you look around in your local area, have the builders stopped building? No, they have not. There could not be a better time to be an adviser in this market, in my opinion,” says Somerville.

However, Reid adds that the uncertainty of the market means it’s likely that the advisers with advanced training and qualifications will be the ones who find themselves at a professional advantage when things rebound “because the market isn’t as simple as it as it has been in the past.”

“With the market as turbulent as it is and with the myriad products and choices available making things particularly difficult for consumers, there's never been a greater need for mortgage advisers. So, develop your skills as much as possible to help you stand out. If you’re recognised as being even more professional and more qualified than other people in the market, you’ll attract clients.”

With a surfeit of buyers looking to get onto the housing ladder, along with some 1.5m due to see their current mortgage deal expire by the end of next year, advisers who can stand out in the market should find themselves well placed to thrive.

Related content


Read more about our CeMAP Diploma qualification