The UK mortgage market is evolving rapidly due to new regulations, economic shifts and political changes. This article explores recent and upcoming regulatory changes, examining their potential effects on brokers and borrowers based on recent data and news releases.
Recent regulatory changes
Stricter lending standards
The Financial Conduct Authority (FCA) aims to minimise the number of people borrowing beyond their financial means. As a result, the process for obtaining a mortgage will now involve more rigorous checks, detailed paperwork and stringent assessments, making it more challenging for some individuals.
Interest rates and economic impact
The Bank of England’s base rate remained steady at 5.25% from August 2023 until August 2024 when it dropped to 5%, despite ongoing concerns about price rises on everyday items and financial products, such as mortgages. Although inflation has fallen to its lowest level since 2021, mortgage rates have not yet significantly decreased. Brokers must stay informed about interest rate changes to offer accurate advice on mortgage affordability. Borrowers should prepare for potential fluctuations in mortgage costs and consider long-term affordability when choosing a mortgage.
Market trends
Recent data reveals notable trends in the UK mortgage market. The outstanding value of residential mortgage loans decreased by 0.1% to £1,654.9 billion, a 1.4% drop from last year. Gross mortgage advances fell by 2.6% to £51.6 billion, the lowest level since mid-2020, and 12.0% lower than last year. However, new mortgage commitments increased by 30.8% to £60.1 billion, indicating strong demand.
For brokers, this rise in new mortgage commitments suggests a busier period ahead. Borrowers should explore various mortgage products, including green mortgages and shared ownership schemes, as the range of options expands.
