November’s Autumn Statement brought unexpected twists, setting the stage for a potential General Election in 2024. Rishi Sunak’s promises of halving inflation, coupled with pensioners’ triple lock rise and a 2% cut to National Insurance, seemed to paint a positive economic picture. However, beneath the surface, warnings from the Bank of England and the Office for Budget Responsibility suggest a challenging road ahead.

The Prime Minister’s pledge to halve inflation received a boost with October’s 4.6% figure. Despite this, Bank of England Governor Andrew Bailey cautioned against premature optimism, stating it’s “much too early to declare victory.” Forecasts indicate a decline in inflation for 2024, but concerns linger about the impact on household finances, especially for those at the lower end of the income scale.

While inflation may be receding, the cost-of-living crisis persists, with the lower-income bracket bearing the brunt. As 2024 unfolds, the effects may ripple through more comfortable households, especially as 1.6 million fixed-rate mortgage deals are set to end, following 800,000 in the second quarter of last year.

The end of fixed-rate mortgage deals coincides with a rise in arrears. The Financial Conduct Authority (FCA) predicts potential payment difficulties for 356,000 borrowers by June 2024, primarily affecting London and the south east residents in the 18 to 34 age group. The impact of higher mortgage rates is poised to be felt by first-time buyers and young families, straining already stretched budgets.

As 2024 shapes up to be a pivotal year, lenders play a crucial role in supporting borrowers. Flexible approaches and innovative thinking are paramount, recognizing borrowers as individuals, not just numbers. Amid the challenges, some lenders are stepping up, offering tailored solutions to assist clients through initiatives like Shared Ownership, Joint Mortgage Sole Proprietor, and increased loan-to-value (LTV) deals.

As the economic landscape evolves, 2024 promises to be a year of challenges and opportunities. Lenders that embrace flexibility and innovation will distinguish themselves in supporting borrowers through these uncertain times. While economic policies may influence the housing market, the real difference will be made by brokers who prioritise creative thinking and see borrowers as more than just statistics.

If you’re concerned about debts, arrears and credit affecting your mortgage and/or borrowing potential, reach out to a trusted broker today. They’re here to help guide and advise you on the best path to financial confidence.

Annabelle Bezant, January 2024