Evolving Mortgage Customer Behaviour: Mortgage customers did not stop wanting homes during 2023. However, many changed how they researched, compared and approached borrowing.
Rising household costs made affordability more important. Higher mortgage rates increased caution. Digital research became a larger part of the decision process.
Yet access to more information did not remove the need for explanation. In many cases, greater choice created more questions.
This study reviews evidence available by 2 August 2023. It examines how economic pressure, digital habits and changing working patterns affected UK mortgage customer behaviour.
At a Glance
- Mortgage customers became more cautious during 2023.
- Monthly affordability often mattered more than the headline mortgage rate.
- Younger borrowers faced greater financial pressure.
- Customers researched online before contacting an adviser.
- Digital access improved convenience but did not replace personal advice.
- Self-employed applicants needed clearer explanations about income evidence.
- Earlier conversations helped borrowers understand realistic options.
What did this study examine?
This article reviews mortgage customer behaviour through four connected areas:
- Household affordability
- Mortgage research and comparison
- Communication preferences
- The need for individual mortgage advice
The study draws on data and research published before August 2023. Sources include the Financial Conduct Authority and the Bank of England.
It is an evidence review, not a survey, conducted by Connect Mortgages. Its purpose is to identify practical patterns within the 2023 mortgage market.
Finding one: affordability became the first question
During earlier periods of lower borrowing costs, customers could begin with property price or preferred location.
By 2023, many conversations began elsewhere:
What monthly mortgage payment could the household safely manage?
The rising cost of food, energy, travel and other essentials reduced the income available for housing costs.
The Bank of England reported that rising living costs and interest rates were stretching household finances. It is expected that more households will experience mortgage payment pressure during 2023.
Customers therefore needed to assess more than the amount a lender might offer.
They also needed to consider:
- Current monthly expenditure
- Existing credit commitments
- Possible rate changes
- Future childcare or travel costs
- Emergency savings
- Changes to household income
A lender’s affordability decision and a household’s preferred budget are not always identical.
Our guide to residential mortgage affordability explains the information lenders may review.
A separate mortgage affordability guide also explains how income, debts and spending can affect borrowing.
Finding two: younger borrowers faced greater financial strain
The FCA examined the possible effect of changing economic conditions on mortgage borrowers during 2023.
The research suggested that borrowers aged 18 to 34 may be more likely to experience financial strain than other working-age borrowers.
The pressure did not come from one cost alone.
Younger applicants could be managing:
- Rent while saving a deposit
- Student loan deductions
- Higher household bills
- Limited savings
- Shorter credit histories
- Childcare commitments
- Less experience in changing interest rates
This changed the questions many first-time buyers asked.
Customers were not only asking whether they could obtain a mortgage. They were asking whether the payment would remain manageable after other essential costs.
The FCA’s research on mortgage borrowers and economic conditions provides further context.
People preparing to buy their first home can also read our first-time buyer mortgage guidance.
Finding three: customers researched before making contact
Digital research became an established stage of the mortgage journey.
Before contacting an adviser, customers could compare rates, estimate repayments and read about lender requirements.
Common searches included:
- How much can I borrow?
- What deposit will I need?
- Will mortgage rates fall?
- Can I get a mortgage while self-employed?
- What happens when my fixed rate ends?
- Will existing debts affect my application?
This behaviour gave customers more knowledge. However, online information could not always account for individual circumstances.
A calculator might provide an estimate without knowing:
- How a lender treats variable income
- Whether overtime will be accepted
- How existing credit affects affordability
- Whether a property meets lender criteria
- How long has the customer been self-employed
- Whether a product carries early repayment charges
Digital research was therefore often the beginning of the decision, not the complete decision.
Customers can use our mortgage calculator to produce an initial repayment estimate. The result is illustrative and does not represent a mortgage offer.
Finding four: customers wanted convenience and human explanation
Customer behaviour in 2023 did not show a simple move from human advice to digital-only services.
Instead, many customers expected both.
They wanted:
- Online information available at any time
- Clear explanations without unnecessary terminology
- Telephone or video appointments
- Secure ways to provide documents
- Progress updates during an application
- Access to a person when circumstances became complex
A fully digital journey may work for initial research and document collection. However, mortgage suitability can depend on details that a generic online journey may not recognise.
A customer with standard employment and a large deposit may need a different service from someone with:
- Irregular earnings
- Recent self-employment
- Previous credit problems
- Several buy-to-let properties
- Income from more than one source
- A property with unusual construction
Technology can make the mortgage process quicker. It should not make the reasoning behind a recommendation less clear.
The practical principle is simple: speed helps, but understanding protects the decision.
Finding five: self-employed customers needed clearer criteria
The growth of freelance work, contracting and small businesses changed the profile of mortgage applicants.
Self-employed customers often believed they would automatically face rejection. The issue was usually more specific.
Lenders needed evidence showing whether income was reliable and sustainable.
Depending on the applicant and lender, documents could include:
- Finalised business accounts
- Tax calculations
- Tax Year Overviews
- Business bank statements
- Personal bank statements
- Current contracts
- Accountant’s references
- Evidence of retained profit
Different lenders could interpret the same business figures differently.
For example, one lender might focus on salary and dividends. Another might consider a share of retained profit.
This made early preparation especially important.
Our self-employed mortgage guide explains the evidence applicants may need before applying.
Finding six: remortgage customers started considering options earlier
Customers approaching the end of a fixed-rate mortgage faced greater uncertainty in 2023.
Many had secured their existing mortgage when rates were lower. Moving to a new product could therefore mean a higher monthly payment.
Behaviour changed as customers began reviewing options earlier.
They wanted to understand:
- When their current rate would end
- Whether an early repayment charge applied
- What their lender’s follow-on rate would be
- Whether another lender could offer a suitable product
- How a higher rate would affect monthly payments
- Whether changing the mortgage term could reduce payments
- Whether remaining with the existing lender was appropriate
The right decision was not always the product with the lowest advertised rate.
Product fees, valuation costs, legal work, incentives and early repayment charges could affect the overall cost.
Borrowers could also use an affordability calculator to test possible repayment levels before seeking advice.
What did changing behaviour mean for mortgage advice?
The 2023 evidence suggests that mortgage customers valued three things:
Clarity
Customers needed information they could understand and apply to their circumstances.
Context
A rate or borrowing figure meant little without the associated fees, term, risks and monthly cost.
Continuity
Mortgage needs did not end when a purchase completed. Income, family circumstances, property plans and interest rates could change.
This shifted the mortgage conversation away from a single transaction.
Good advice required an understanding of the customer’s position at the time of application. It also required consideration of how the mortgage might perform if circumstances changed.
Practical steps for mortgage customers
Customers responding to the 2023 market could take several practical steps.
Review household spending
Use recent bank statements rather than relying on rough estimates.
Check credit records
Incorrect information or unknown credit commitments could delay an application.
Prepare income evidence
Employed, self-employed and contract workers may need different documents.
Test higher repayments
Consider whether the household could manage if rates or other costs increased.
Start early
First-time buyers and remortgage customers benefit from understanding requirements before an urgent deadline develops.
Ask what the mortgage costs overall
Review fees, incentives, repayment type, term and early repayment charges.
Study limitations
This review reflects evidence available by 2 August 2023.
Customer behaviour varied according to age, income, location, employment, property plans and financial commitments.
The findings identify broad patterns. They do not predict how every customer will behave.
Mortgage rates and lender criteria can also change. Customers should check current information before making a decision.
The deeper lesson from the 2023 market
A mortgage is measured in numbers, but it is experienced through everyday life.
A lender may assess income, expenditure and credit commitments. The customer experiences those figures as security, responsibility and future choice.
The central change during 2023 was not that customers became unwilling to borrow.
They became more deliberate.
They researched earlier, questioned affordability and expected digital convenience. They also needed clear human explanations when the decision became personal or complex.
That was not resistance to the mortgage market. It was a more careful way of taking part in it.
Speak to a mortgage adviser
Changing customer behaviour reflects a changing financial environment.
Whether you are buying, moving, remortgaging or working for yourself, preparation can make your available options easier to understand.
Contact Connect Experts to discuss your circumstances with a mortgage adviser.
Frequently asked questions
How did mortgage customer behaviour change during 2023?
Customers became more cautious about affordability, researched more information online and often sought advice earlier.
Why did affordability become more important?
Higher mortgage rates and household costs reduced the income available for monthly mortgage repayments.
Did customers prefer digital mortgage services?
Many customers valued digital research, calculators, video appointments and document uploads. Complex decisions could still require personal advice.
Why were younger borrowers under greater pressure?
Younger borrowers could face deposit challenges, rent, student loan deductions, limited savings and less experience of changing mortgage rates.
Did self-employed people have fewer mortgage options?
Not necessarily. However, they often needed more detailed income evidence. Lender assessment methods also varied.
When should a customer review a fixed-rate mortgage?
A customer should check the end date and any early repayment charge well before the current rate expires.
Your home may be repossessed if you do not keep up repayments on your mortgage.
