Reflecting on 2024 and a look forward to 2025

December has crept up on us, which brings us closer to the end of a pretty challenging twelve-month period for mortgage advisers, and I suspect there will be few who aren’t looking forward to a welcome break at the end of the month.

In the stock market at this time, many speculate on whether we’ll see a ‘Santa Rally’ with equities rising in order to end the year on a positive note. In the mortgage market, the equivalent might be a spate of rate cuts to provide a similar feeling and indeed to hit the ground running in the new year. 

At this time last year, we started to see the beginnings of an – albeit short-lived – ‘rate war’ fuelled by falling swap rates acting as a catalyst for a domino effect of product pricing cuts. 

Good news of course, with the one caveat being the extra work this entailed for advisers in terms of continuing to keep up with the best rates as they shifted, and the extra paperwork and administration involved in securing those products as they moved on an almost daily basis. 

As I write, the likelihood of something similar taking us through December and into January seems slim. With the caveat, however, that swaps are down on where they were a month ago in the immediate post-Budget period, and are quite significantly down on where they were a year ago.

The potential for Lender rate cuts has grown, and again in the last couple of days we’ve seen them from the likes of HSBC, so we should not rule out others following. It will be interesting to see how this progresses in the weeks ahead.

We are also only a couple of weeks away from the next MPC meeting and we should not forget that the next time any action can be taken is the 6 February, which seems like a long time into the future. 

Can we therefore truly rule out a rate cut this month? Many have, but I wonder whether the almost zero impact of last month’s decision to cut BBR will make MPC members consider, more forcefully, the potential to double-down with a further drop before the end of the year?  I’m not betting on it… but I wouldn’t bet against it!

Certainly, inflation is very close to target, and as many have already pointed out, it was pretty far from 2% when the MPC decided to act in August, for example. Food for thought, one might say.

On the housing and mortgage front, Zoopla recently predicted both house prices and sales volumes would grow next year. The pre-stamp duty threshold changes at the start of April 2025 might well drive increased demand and activity over the next four months, as first-time buyer purchasers try to get in before they have to pay more tax. 

Given the lead-in time to buy, however, there is a limited amount available to be able to do this and complete, but advisers – and conveyancers – are likely to be much in demand over the next few months or so, as those who might have been waiting see the opportunity to save a little money, now act.

The remortgage market will continue to deliver a significant amount of business. UK Finance said recently that 1.8 million fixed-rate mortgages will come to an end next year, which is up on the 1.3 million that were due to end in 2024.

We know product transfers (PTs) will continue to account for a significant part of this business, with record maturities of c£400bn in 2025, as lenders seek to provide incentives for existing borrowers to stay. However, in a more competitive rate environment, with affordability easier to achieve, and with lenders also seeking to secure business from other lenders, the opportunity to move borrowers away is likely to grow.

Clearly this is important in the context of PT procuration fees and the unfortunate ongoing position many lenders take in terms of not paying parity. Let’s hope we finally start to see some sense in this space, and an acknowledgement that the current situation is unfair, and often not commensurate with the intermediaries’ work involved, especially given the amount of PT business being written. 

Certainly, we will continue to push for a fairer approach to PT fees on behalf of our members. In the meantime, advisers should of course take advantage of the improved commissions that can be achieved via distributors like ourselves, where perhaps a review of commercial terms is worthwhile.

And on that note, as this is my last article for the Society of Mortgage Professionals for 2024, I’d like to wish all readers a very Merry Christmas and a happy New Year. It has been an often difficult and challenging 12 months, punctuated by a number of ups and downs, and often with a start-stop feel to it. 

That being the case, 2025 does at least hold the promise of a greater degree of stability with the potential for rate cuts along the way, which should help drive demand further. However, before then I hope you can all enjoy the holiday break and recharge the batteries for the year ahead. 

Bob Hunt is a board member of the Society of Mortgage Professionals and Chief Executive of Paradigm Mortgage Services