New research from Crystal Specialist Finance, reveals how mortgage brokers viewed the market in the first half of 2023 and gathered their thoughts on the driving forces for new business and the industry for the remainder of the year.

Crystal surveyed their broker database in early July to gauge their thoughts on the industry and get a sense of how they are feeling about the market going into the second half of 2023.

The research was a follow up on Crystal’s ‘2023 Predictions Survey’ which was conducted in December 2022 – to gauge brokers thoughts on the year ahead.

The specialist finance distributor asked the same series of questions to understand how brokers views had changed in the intervening six months.

Of brokers surveyed, 60% thought first-half 2023 was about the same or worse than 2022. At the end of 2022, 48% of brokers surveyed agreed that 2022, despite its challenges towards the back end of the year, was a good year for business and indeed better than 2021.

The uncertainty brokers shared at the start of the year remained, but the picture had improved. 74% of responders stated that they were either unsure about the year ahead or worried about the prospects for their business. This number dropped to 67% at the half year.

This could be a reflection of the resilience of mortgage brokers and their adaption to the ongoing market turbulence becoming the ‘new norm’.

At half one, brokers placed more emphasis on continued interest rate uncertainty as the key factor that will impact their business in the remainder of 2023 – at 80%. At the start of the year this was 76%.

The relevance of cost-of-living crisis lessened with 66% polled citing it as having an impact. At the start of 2023 this was also 76%.

However, more brokers agreed that more clients lacked confidence. By half one it had risen to 40% from 35% at the start of year.

Brokers also felt that fewer of their landlord clients were prepared for the forthcoming changes to EPC legislation. At half one, 43% said landlords weren’t prepared. At the start of the year this was 30%. However, 40% now said they were ready, up from 30% at the start of 2023. The big change was in the ‘don’t knows’.

Interestingly, brokers have had a big shift in their thoughts on the direction and peak of the Bank of England base rate. At the start of the year there was some optimism with over half of respondents (54%) stating that it wouldn’t go above 5%.

Now 40% think the base rate will peak above 6%.

Only 10% now believe it will peak at 5.25%. At the start of the year 54% believed that BR wouldn’t even reach 5%!

The data also reveals that most brokers diversified into new markets in the first half of 2023 in response to market challenges, with bridging finance leading the way at 27%. 23% expanded into commercial finance and 20% buy to let.

This diversification looks set to continue, with 67% of brokers agreeing that they expect to diversify further during the remainder of 2023.

As a consequence, more brokers now expect to work alongside a master broker  in the remainder of the year and this number has increased from the end of 2022.

At that time, 52% expected to work more with a master broker – that number has risen to 63%. Brokers cited the complexity of their cases, their expectation of an increase in second charges and an increase in clients with adverse credit histories as the main drivers for doing so.

Crystal Specialist Finance managing director Jo Breeden comments: “At the start of 2023, we were hoping for some form of stability with inflation coming under control and this being reflected in mortgage pricing and availability.

“Instead, we saw the opposite and it is only as we approach Q3 that inflation is falling – but not at the rate the Bank of England or the markets want to see.

Our survey has revealed that brokers are still uncertain about the remainder of 2023, just as they were at the start of the year. That said, many have used the opportunity to diversify into new markets to bolster their businesses.”

He adds: “While the wider residential housing market is in decline, this presents opportunities for the resilient broker that is prepared to investigate new markets – such as bridging, commercial finance and complex buy to let.”