Specialist mortgage market 2022 – the year in review

Adrian Moloney, group intermediary director, OSB Group (Precise Mortgages, Kent Reliance for Intermediaries and InterBay)


It has been another rollercoaster of a year. We approached New Year 2022 with high hopes for a return to normality as the pandemic receded. Where 2021 was characterized by the chaos brought about by fierce competition for record low housing stocks, compounded by the Stamp Duty holiday, 2022 would be comparatively calm, we thought. Let’s look back and see how that panned out…

The first half of the year saw healthy levels of mortgage business  written across the mainstream and specialist sectors. With Bank Base Rate (BBR) creeping steadily from 0.25% in January to 1.25% by June and inflation starting to take off, borrowers rushed to lock in to fixed deals before rates increased further. In the specialist mortgage market, demand for short-term bridging finance also remained red hot as borrowers looked to complete quickly, reaching record levels by the third quarter.

The complex buy-to-let market remained buoyant, underpinned by sustained tenant demand. June’s Renters’ Reform Bill, coupled with rising rates, impacted landlord confidence levels somewhat. However, ‘Landlord Leaders’ research we undertook in August showed that the portfolio investors more likely to be served by specialist lenders remained positive about their prospects.

But underlying strong activity was constant concern about the rising cost of living in general and energy bills in particular. With BBR on an upward trajectory, by the summer ‘affordability’ became the watchword on the mortgage industry’s lips.

Then of course came September, and Liz Truss’s unfunded ‘fiscal event’. Market confidence collapsed overnight, swap rates and their associated fixed mortgage rates soared, lenders rushed to pull and reprice products, while brokers did their utmost to reassure panicking borrowers watching their homebuying dreams implode and refinancing costs soar.

This was a hugely stressful time for mortgage intermediaries. Specialist, intermediary-only lenders have a unique interdependency with the broker community, and we did our utmost to keep the lines of communication open during this period of economic meltdown. Inevitably some deals were regrettably lost, but most specialist lenders worked hard to honour our pipelines, complete deals and avoid reneging on cases at the last moment. By the end of October, service levels were largely restored, but with product pricing at a whole new level across the board.

November saw COP27, reminding us of the role of housing in the UK’s journey to net zero carbon. In the buy-to-let sector, concern over potential EPC requirements had rumbled on all year, with a long-standing belief prevailing that landlords were reluctant to upgrade their properties. However, our research revealed that this was not the case, and that 80% of larger portfolio landlords are prepared to invest in energy-efficiency measures, a fact which is shaping our future lending strategy and, we hope, others lenders’ plans.

So what is in store for next year? A challenging economy likely means less total mortgage lending - but more demand for specialist solutions, and for good accompanying advice. Specialist lenders and brokers alike should be kept busy, so we wish you a restful break – and a prosperous New Year!