A profit warning has been released by Mortgage Advice Bureau, with the Derby-based firm pointing to the September mini-budget as the reason, due to its “quick and far-reaching” consequences.
The business noted that extreme market conditions followed the September mini-budget, and said that significantly heightened levels of uncertainty had a direct negative impact on the mortgage market, including an immediate rise in mortgage interest rates, the withdrawal of many mortgage products by lenders, a rapid tightening in underwriting and reducing availability of credit.
As a result, house purchase activity was significantly reduced and re-financing was also impacted. This situation then persisted as borrowers and lenders awaited some level of reassurance and clarity from the Autumn Statement.
These extreme market and lending conditions have “severely impacted” activity levels across all of the group’s product lines, with written business in October and November circa 50% below expected levels. The reduction in mortgage activity and new house sales is expected to persist until early 2023.
Mortgage Advice Bureau said that its financial result for the year ending 31 December 2022 will be impacted by the adverse market conditions, with adjusted profit before tax expected to be slightly below market expectations, with next year’s result anticipated to be considerably impacted.
The company has also noted the placing of property portal Boomin into liquidation has led to a £2.8m non-cash write off for its investment.
Peter Brodnicki, CEO of MAB, said: “The consequences of the so-called mini-budget have been quick and far-reaching. Overnight our market moved from being fairly stable and reasonably confident, to almost the polar opposite. The sudden and unexpected pace of mortgage rate increases, combined with the tightening of mortgage lending criteria, have resulted in some customers pausing both home-moving and re-financing plans.
“The recent Autumn Statement and the various Government changes prior to that have helped to stabilise markets. Although macro uncertainty remains for many reasons, we expect mortgage rates to continue to stabilise, allowing some customers to re-enter the home-moving market and also re-finance at more competitive mortgage rates than those seen in recent months.
“Despite the various market and political challenges, MAB remains very well positioned to grow its market share strongly through 2023. In more challenging housing markets although we may see a reduction in organic advisers our new AR recruitment performs strongly, so next year overall adviser numbers could remain flat.
“The re-financing opportunities in 2023 are significant, and with the technology enhancements we have delivered, MAB is in a better position than ever to optimise those opportunities. As expected, protection attachment rates have already started to improve in the current environment, and our focus to ensure that continues has never been greater. As we see in housing downturns, transactions are delayed, they are not lost.”
