Mortgage market Outlook: Rising opportunities amid new challenges
By Family Building Society
The 2024 mortgage market is seeing both new challenges and strong opportunities across later life lending, intergenerational support, and Buy to Let (BtL) investments. While changes like increased stamp duties and regulatory reforms present hurdles, intermediaries, lenders, and brokers are adapting to serve a growingly diverse client base.
Renewed optimism among lenders
Following the Bank of England’s recent rate cut, mortgage inquiries are rising, with a Family Building Society survey showing 64% of intermediaries reporting growth in applications and a 56% increase in those wanting to move. Later life lending has been especially strong, with data from UK Finance showing that the value of new loans increased by 17.5% year on year for Q2. Still, there’s caution about future rate cuts and their potential impact on mortgage rates, even as 2024 comes to an end.
Expanding access for later life borrowers
With an aging population, later life lending is gaining traction. High-street lenders often don’t account for complex income sources like pensions or dividends, leaving some borrowers underserved. Specialist lenders, such as Family Building Society, who offer manual underwriting are filling this gap, allowing retirees to qualify for longer terms and Interest Only mortgages. Joint Borrower Sole Proprietor (JBSP) mortgages, which allow adult children to help parents qualify, are increasingly popular as flexible solutions for these clients.
Intergenerational support drives first-time buyer demand
L&Gs recent research into the Bank of Family, showed that family support is widening with 13% of financial assistance coming from grandparents and 27% coming from wider family and friends, with this area of lending reaching a record £9.2 billion in 2024. This growth mirrors what our Business Development Managers are seeing on the ground and the reason why we recently improved the criteria for our Joint Borrower Sole Proprietor (JBSP) mortgages – extending family members who can support the mortgage from parents and grandparents to include also aunts, uncles and siblings, helping more buyers onto the property ladder.
Buy to Let market: New pressures and potential
BtL faces transformation after the October budget changes brought in by Chancellor Rachel Reeves, including a Stamp Duty hike on second homes from 3% to 5%. Although this aims to increase housing availability, it adds costs for landlords already facing interest rate hikes and higher compliance expenses. Demand for rentals remains strong—rent prices rose 6.1% in the last year—but profit margins for smaller landlords are narrowing, with some opting to exit the market. The new Renters’ Rights Bill, which mandates no-fault eviction bans and Ombudsman registration, may prompt further consolidation, as larger landlords with stable cash flows are better positioned to manage these costs and expand.
The Path Ahead: Personalized solutions amid change
As 2024 draws to a close, the mortgage market presents a dynamic mix of opportunities and challenges. Later life lending is continuing to grow, driven by specialist lenders who cater to an aging population with increasingly diverse financial needs. For first-time buyers, intergenerational support remains an essential lifeline, helping to overcome persistent affordability barriers. Meanwhile, the Buy to Let (BtL) market is navigating substantial regulatory and tax changes, likely prompting market consolidation as larger, more resilient landlords step in.
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