Yesterday saw the UK post better-than-expected inflation data leading to speculation that mortgage rates could have topped out.
With the Bank of England being predicted to slow down interest rate rises in response borrowers have woken up to more optimistic news about the mortgage market – including news that average rates have dropped for the first time in months.
Free PR Platform Newspage asked brokers what they were hearing from lenders and their clients.
Stephen Perkins, managing director at Yellow Brick Mortgages:
“We have already been receiving emails from clients asking if they should hold off applying for a remortgage right now and play the odds of a potential rate reduction over the next month or so.
“The answer of course is to secure a rate now, and we can switch to a better rate should they become available. The recent positive news in the media about easing inflation and a potential end to continual rate rises has certainly encouraged a lot of borrowers.”
Kirsty Wells, director at Blueprint Mortgages & Protection:
“So far, I haven’t seen a reduction in mortgage lenders’ interest rates on offer. Lenders have still been emailing this week to advise of rate increases, so I think it is too early to breathe a sigh of relief just yet. Sentiment may have improved but, for now at least, it hasn’t translated into a major lender repricing downwards.”
Craig Fish, director at Lodestone Mortgages & Protection:
“The only movement of note so far is that Gen H has reduced their rates, in some cases by up to 0.6%. This is a great indicator of things to come but does make you wonder if the products were a little overpriced in the first place for such a big reduction so soon after the slight reduction in swap rates. I think it will be some time before we see any real movement of note.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management:
“I had an interesting email yesterday. So unexpected I had to read it twice. In a sea of emails telling me that rates are increasing, there was an email from NatWest that also told me about rates increasing.
“However, at the very bottom, were the words “rate decreases of 5bps on selected 5-year deals”. It feels like a long time since I’ve seen that word: decrease. Now, for context, this is applicable just to existing customers looking to switch to a new deal and the reduction in rate is tiny, but still, worth a mention.”
Justin Moy, managing director at EHF Mortgages:
“We saw a flurry of price increases from mortgage lenders yesterday, so it may be a bit premature to talk about reductions just yet. The signs are positive, but inflation is still very high, so the Bank of England will undoubtedly increase the base rate a bit further, probably by 0.25% in August and the same in September.
“Just seeing rates flat-line for a week would be excellent. Inevitably, tracker and fixed rates will be priced closer to each other first, and then some improvements towards the end of the summer. But the reaction from clients to the news headlines just shows how much the public is looking for positivity. Give it a little more time before we start cartwheeling.”
Riz Malik, founder & director at R3 Mortgages:
“Yesterday’s inflation numbers were the most encouraging economic data the market has received for quite some time, provided that the data for August continues this downward trend. Some individuals are already predicting the peak of the market, however, such assumptions may be too hasty. By this time next month, we should have a clearer understanding of our economic position for the remainder of the year.”
Rohit Kohli, operations director at The Mortgage Stop:
“Given all the media focus on swap rates within a couple of hours of the inflation figures coming out, we’d had clients send across charts on what swap rates were doing, asking “any news?” Gen H is the only lender to move so far. None of the big boys has moved yet, which isn’t much of a surprise. Perhaps the Mortgage Charter should have included something in there to ask lenders to commit to reducing rates just as quickly and as frequently as they increase them.”
Kylie-Ann Gatecliffe, director at KAG Financial:
“Generation Home were the first lender to send a “we are reducing our rates” email last night. This is the first of its kind in weeks so it is a welcome change for brokers and their clients. Hopefully, we will see more lenders follow suit in the days and weeks ahead.
Ranald Mitchell, director at Charwin Private Clients:
“Yesterday’s positive inflation news is encouraging however the next 12 months could still be a bumpy ride for mortgage borrowers. Many believe that the base rate will peak around 6.25% by Spring 2024 and with inflation still well over target, it is likely that the Bank of England will pursue the interest rate campaign to curb inflation. The question is, how aggressive will they be in chasing target inflation down?
“Whilst the average rate may have fallen slightly, this could be a result of the retail lending market overpricing in past months. They still need to shift money to make money and those that have perhaps overpriced, are now trimming margins to boost lending figures. I still expect the high street lenders to be pricing circa, 7% within months. We’ve got a long way to go yet before we see steady reductions in mortgage pricing.”
Russell Maggs, mortgage & protection adviser at Maggs Financial Services:
“Yesterday saw a small handful of mortgage lenders increasing rates. And whilst my email inbox is recieving less product updates from banks than in previous weeks, it’s still early days following Wednesday’s inflation data. A deeper dive into the figures, show that inflation figures for food and housing were are at 17.3% and 12.0% respectively.
“These are the figures that should ultimately be grabbing the headlines as we head into a stagnating market where many can’t afford to spend money on anything else, as the essential costs of living, food and keeping a roof over our heads continue to rise. How the markets respond to that data may still take a few days to come out in the wash.”
Elliot Cotterell, director at Windsor Hill Mortgages:
“Lenders tend to factor in changes to their rates in anticipation of increases to the Bank of England base rate and rather than reducing them straight away, I think we are more likely to see them hold and take a breath rather than jump into reducing rates. I’d like to think we’ll see a pause on the aggressive rate pulls but I don’t think we’ll be lucky enough to see a flurry of lenders reducing rates just yet. Hopefully, my pessimistic view is proven wrong but let’s see.”
Rob Gill, managing director at Altura Mortgage Finance:
“The trend so far is the smaller, specialist lenders such as building societies and challenger banks returning to the market with new products, and lower rates. Having led the way in hiking rates and withdrawing products a few weeks ago, for larger lenders to then follow, the hope is now they’re also leading the way and mainstream lenders will again follow their lead.”
Michael Webb, managing director at Mortgage Republic:
“There are most definitely some positive signs in the mortgage market and wider economy, but let’s not get ahead of ourselves. Inflation still stands at 7.9%, and whilst it has dropped, it doesn’t mean things are getting cheaper, it just means they are not getting more expensive as quickly. Marginal moves in the average two-year fixed rate could be attributed to many things, as simple as one lender withdrawing products for a time to relaunch.
“Therefore, whilst there are signs of positive moves, I do not expect this to slow down the Bank of England’s projected base rate growth plan to reduce inflation back to a 2% target. Those that have been through these economic cycles before will know they are not solved in a matter of months but can take several years. We must add into the equation that 2024 is an election year and it is possible the real pain is to come in the first year of any new Government, with the current one trying its hardest to avoid anything catastrophic in the interim.”
