2023 Overview

By : Adrian Moloney | 25 Jan 2023 | 3 mins read

Let’s face it, there will be some hard yards to cover in 2023. The cost of living challenges and higher interest rates mean a contraction in the total size of the mortgage market is probable, but within that there will definitely be growth areas and borrowers who need more, or different, support. To give a very broad-brush overview, we’re likely to see fewer vanilla first-time buyers and a reduction in residential purchases, but a rise in demand for both adverse and complex specialist mortgages, and a changing buy-to-let landscape.

There are certainly new dynamics at play in the buy-to-let sector. While steeper borrowing costs may well force some landlords to quit the market, softer purchase prices are encouraging others to expand their portfolios - in November, 37% of offers were from landlords on properties with no competing offers, up from 11% in January 2022 according to figures from Hamptons.

This chimes with our own Landlord Leaders research of H2 2022, which revealed that 68% of all landlords recently had or were planning to buy more property, breaking down into 40% of part-time landlords but 80% of professional landlords, defined as those with four or more properties who generate their main income from their buy-to-let business.

What’s more, 80% of professional landlords told us that they already have or plan to invest in energy efficiency improvements. This significant thematic shift is shaping our buy-to-let strategy – the £50m Landlord Leaders fund we announced in November to support these landlords is just the first of a raft of measures OSB Group will be introducing this year to cater for this active group of buy-to-let borrowers, and progress on the road to decarbonisation.

On the residential side, given the huge leap in living costs, lenders need to be ready for a surge in the number of borrowers with less-than-perfect credit records, who find themselves in the ‘adverse’ category, often due to circumstances beyond their control. Whether they have recent County Court Judgements, defaults, arrears or Debt Management Plans, we need to provide suitable mortgages via reliable systems not requiring multiple applications which could further compromise credit records.

After the economic rollercoaster of the last three years, we also anticipate yet more first-time and other borrowers presenting with complex incomes – not necessarily adverse, but falling outside the narrower confines of the mainstream, and in need of specialist attention. As a result, brokers will play an essential role for yet more borrowers in the year ahead, who will need their expertise and advice to find the best solutions.

Of course, I’ve sketched out just a few of the trends for 2023 here – a year is a long time in any market, and rapid, seismic change is not uncommon, as we have recently been reminded! Whatever 2023 brings, at OSB Group we aim to offer more products and better service to a broader range of customers, through deeper relationships with our trusted brokers – and to keep you in the picture throughout.

This article first appeared in the Mortgage Introducer.

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