In light of a number of lender rate rises in the past few weeks, Newspage asked brokers if this trend has impacted demand for residential mortgages.
Justin Moy said “mortgage rate rises are definitely making more buyers think twice,” while Riz Malik added that “in early January, the market picked up some real momentum, and then the uptick in inflation put a stick in the spokes.”
Ben Perks said: “In our experience, demand from purchasers always drops off while rates are so unpredictable.
“As a result, the property market is slower and there is definitely a sense that buyers are waiting it out to see what happens.”
Darryl Dhoffer said: “Lenders turning on the wave machine is causing major uncertainty among borrowers, which is not what we wanted after a strong start to the year.”
However, Akhil Mair said the recent hikes are triggering more borrowers into action: “Recent rate hikes, with the exception of the Halifax, have prompted borrowers to act swiftly.”
Reaction:
Justin Moy, managing director at EHF Mortgages:
“Mortgage rate rises are definitely making more buyers think twice.
“However, as long as rates don’t tip into the 5% range for standard mortgage deals, we might just come out of this by the skin of our teeth.
“Pent-up demand from those who abstained from moving in 2023 is helping, as are relatively lower house prices, which many see as a good opportunity.
“However, the relatively short supply of property is keeping the market buoyant and panicking buyers suffering from FOMO.”
Darryl Dhoffer, adviser at The Mortgage Expert:
“Borrowers in the mortgage pool are being bounced around by lenders constantly turning on the wave machine.
“On an almost daily basis, mortgage rates are going up and then down.
“Lenders turning on the wave machine is causing major uncertainty among borrowers, which is not what we wanted after a strong start to the year.”
Robert Timm, managing director at Sunland Mortgages Limited:
“Our personal experience is that there’s been a slight reduction in new enquiries in February compared to January.
“That said, it was an unseasonally busy January driven by positive market data and a mini price war between lenders, which has since subsided.”
Ben Perks, managing director at Orchard Financial Advisers:
“In our experience, demand from purchasers always drops off while rates are so unpredictable.
“As a result, the property market is slower and there is definitely a sense that buyers are waiting it out to see what happens.
“This is why we need the government or the Monetary Policy Committee to stimulate the industry through rate cuts, schemes or lower rates. The Spring Budget next week is a big opportunity.
“On the flip side, there is a lot more urgency from remortgage clients.
“Many home owners have kept an eye on rates over the past 12 months and are very wary of another spike up to the 6% products we saw after the mini-Budget.
“So there is little hanging around and borrowers are securing their rates early.”
Riz Malik, founder and director at R3 Mortgages:
“The market still lacks confidence. Only a Budget-related stimulus or a base rate cut will really get things moving in the property market.
“In early January the market picked up some real momentum, and then the uptick in inflation put a stick in the spokes.”
Gary Bush, financial adviser at MortgageShop.com:
“It’s less that the level of interest in purchasing property has stalled and more that potential buyers are totally confused by the insane yo-yoing in rates.
“The majority of UK lenders have been increasing their fixed mortgage rates in recent weeks, while the largest lender in the country, Halifax, went the opposite way last week and reduced its rates.
“This sense of unease will likely be felt by homebuyers until the Bank of England Monetary Policy Committee meets on 21st March when it’s likely that a further base rate hold will be made.
“From that point onwards, lending institutions should have a stable view of the angle of trajectory for the market and they “should” all fall in line with further decreases.
“In the meantime, applicants should get their ducks all in a row with their chosen financial advice firm in readiness for the next round of the mortgage price war.”
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“We’ve experienced a stable month, mirroring last month’s performance, despite the half-term break.
“However, we urge our clients to continue as usual and not to delay in anticipation of future rate cuts.
“We’re closely monitoring rates with our recommended lenders, and should opportunities arise and time permit, we’ll swiftly switch them to more favourable rates available with the same lender. This takes away their stress.”
Ranald Mitchell, director at Charwin Private Clients:
“January witnessed a resurgence of optimism in the mortgage market, as lenders actively reduced their interest rates to boost lending activities, alongside early indications of recovering consumer confidence.
“However, this positive momentum was fleeting, as subsequent increases in headline mortgage interest rates have sent the market back into a state of uncertainty, leaving potential buyers and sellers questioning the timing of their next move.
“The forthcoming Budget is a critical juncture for the current government, potentially determining the direction of the housing market in the lead-up to the anticipated General Election later this year.”
Peter Stokes, director of mortgages at Davidson Deem:
“As far as activity is concerned, it’s almost as if any news is good news.
“If rates are in the mainstream media, whether up or down, it stimulates people to speak to their broker and take proactive action.
“The trick is trying to manage their expectations as to whether these movements are ‘blips’, or more of a longer term trend.
“Swap rates have been on the rise for a week or more now, and although these rises are relatively low, without doubt more astute borrowers are realising that now might be the time to act.”
Amit Patel, adviser at Trinity Finance:
“The housing market needs a boost and the Monetary Policy Committee has the ammunition at its disposal to kick it off at their next meeting on 21st March as we head into the new tax year.
“A rate cut is long overdue to stimulate not only the housing market, but also to give small and medium sized businesses a huge and much-needed boost.”
Michelle Lawson, director at Lawson Financial:
“Things have got a little quieter. Lenders being all over the place with rates are giving mixed messages to the public and causing an unnecessary air or uncertainty.
“The truth and facts are, if your mortgage is coming up for review in the next six to seven months or you are looking to buy, speak to a good broker now.
“They will secure a product now and this will be your worst case scenario.
“If rates come down, we can change them where time permits. It is a win-win outcome for the borrower.”
Akhil Mair, director at Our Mortgage Broker:
“We’ve seen a rise in mortgage enquiries this February compared to January.
“Recent rate hikes, with the exception of the Halifax, have prompted borrowers to act swiftly.
“Waiting for rates to fall again may not guarantee a better outcome.
“It’s crucial to seize the opportunity now and secure competitive rates tailored to your needs.”
Elliott Culley, director at Switch Mortgage Finance:
“Stories in the media have a significant influence on the market and borrowers’ confidence moving forward.
“There has been a reduction in enquiries recently as rates have started to increase and the feel good wave that we were all riding in January is now firmly in the rear-view mirror.
“There is still activity in the market, but don’t be surprised to see the yo-yo approach to rates continue throughout the year as lenders try to compensate for the quieter months.”
