Reflecting on what’s past before moving forward is innately human. So, at the end of the industry’s weakest year in net lending on record, I’d like to talk about the main challenges we faced, which ones will walk with us into 2024 and some concrete action which can add clarity to your lead generation vision.

Seeing the challenges

This year came with its share of highs and lows. In 2023, net mortgage loans were projected to increase by a modest 1.5% net and this is set to be followed by a slight uptick to 2% net in 2024. This forecast from EY ITEM Club, signifies the lowest growth in a decade across a consecutive two-year span.

September 2022 mini-budget brought with it a hangover for the mortgage market. Truss’s cabinet delivered a host of unfunded tax cuts leading to chaos across stock and currency markets, dropping the value of the pound and causing a hike in interest rates. As a by-product, lenders were affected by pricing issues which had an impact on brokers and their customers’ finance, decisions and confidence.

Despite confidence levels of brokers returning in the first few months of 2023, customer confidence has remained affected. This has fed into the slowing activity in the housing market and fuelling house price drops. Coupled with the increase in cost of living, it’s unsurprising we’re seeing affordability play a big hand in lenders’ and customers’ decision making, with many homeowners choosing 35-year mortgage terms, up 117% this year (Mortgage Solutions).

So, moving into 2024, how do we keep things in perspective?

An eye on the future

‘The only constant in life is change’. This may seem a little philosophical for a commentary on lead generation, but it does stand true. The make-up of the mortgage market continues to change:

  • Specialist lending is catching up with the mainstream: 53% of all mortgage applications are from customers who fall outside of mainstream mortgage criteria.
  • Affordability is a growing concern: 22% of applicants are rejected by high street lenders.
  • Complexities of income increase: 23% of Hodge applications come from self-employed applicants.

(Source: Experian, Together, IMLA, UK Finance)

In addition, we know 55-year-olds and over make up around one-third of the UK demographic. People are also working longer with the retirement age open to debate. We’re also seeing a trend towards older first-time buyers, with a 38% increase year-on-year of those over the age of 55 in 2023 (UK Finance data).

But what we do know will be staying with us all into 2024, is the impact of affordability, across all ages. We’re seeing younger generations struggling to get onto the first rung of the housing ladder, and The Guardian reporting the average time to save for a deposit now ten years, up from 6.8 years in 2012.

Our recent Hodge data found that 71% of people had been gifted or borrowed money from a family member in 2023 and for more than a quarter, the money was for a house deposit. Legal & General also reported that 47% of parents had already, or planned to provide financial support for children so they could purchase a house.

At the same time, this transfer of intergenerational wealth is being squeezed from the maturer borrower’s back pocket. Equity from assets for those who aren’t cash rich is even more valuable as an option such as a financially secure retirement plan, maintaining a desired lifestyle or simply to being able to remain in the family home.

So, moving into the next year, here are some proven ways to give you a clear vision for lead generation.

Keeping a clear focus

Today’s older borrowers expect more. They are more knowledgeable, more flexible, they want more options and ultimately more choice. For lenders and brokers, that means we need to step up to the plate and deliver. We need to listen more, understand more and provide more. How do we do this? Here are four ways you can start today.

Know the market

We can’t say categorically, but we can now can appreciate that reasons such as a squeeze on affordability, flexibility, cash poor asset rich, transfer of wealth for family support, house price inflation, the cost of living crisis, retirement plans– all could be factors playing into the reason why your next potential customer could be researching ‘interest only’ for their next mortgage term.

Know your customer

Now more than ever, it’s important to know your customers so you can evidence you really understand them. A one size fits all might be ok for mainstream lenders, but in the specialist lending market, it’s all about being tailored, flexible and bold.

Equity release has a huge place in the later life lending sector, but recognising it’s part of a wider package of options has never been more important. In fact, it’s never been a better time to consider alternative markets. Don’t be afraid of affordability checks, avoiding them is not a selling point, it’s a downfall. How can you understand your client if you don’t understand their income and expenditure?

Build a brand

People buy from people. People trust people. Be seen to be heard, stand out from the crowd and don’t be afraid to be human and show your personality.  Start conversations about how we’ll all learn more and serve better. Social media, podcasts and webinars are a great way to build relationships and create visibility. If you’re interested in being part of our Hodge webinars, or need a creative hand please reach out, we would be delighted to help guide you.

Find a helpful lender

It may seem obvious, but it’s also fundamental for every successful mortgage broker. Lenders like Hodge, get to know who our customers are and what they’re about. Use our expertise to help your business grow.  Our customers are at the core of everything we do. We have a dedicated Customer Research team who get to know our customers and potential customers, their behaviours, wants and needs from knowing them and learning from the data they provide. It’s the reason we have recently made a number of criteria enhancements across our mortgage range over the past few months. Decisions to maximise a client’s affordability such as:

  • Increased the percent on pension drawdown from 3.3% minimum to 8% maximum.
  • Increased income multiples across our 50+ and RIO from 4.49 up to 5 times income on an interest only basis, and from 4.49 up to 5.5 times on a repayment basis.
  • Reduced the stress rate for pound for pound remortgages.
  • Started to accept a life insurance policy to support affordability under the death stress test.
  • Enhanced criteria on our Professional Mortgage including increasing the maximum age of applicants at submission to 50 and reducing the minimum income from £35k to £30k.

Find out more about our criteria enhancements here:

If you’re looking for how to deliver the best outcomes for your clients in the changing marketplace, contact one of our BDMs today.