Kielman, what is happening right now in the mortgage market with regards to rates?

What a couple a weeks I have had. Chatting to clients, doing fact finds making recommendations. On the back of these recommendation, I ask for updated documents to be sent over for me to complete my due diligence, only for the lenders sourcing the cheapest deals to pull those cheapest deals before a nominated deadline usually that day in the evening. Then it’s a frantic call to the client or nominated decision maker to push for authorisation to proceed with their mortgage application.

Generally, I am seeing a around a 0.37% increase in rates from the end of January. Which you may or may not have noticed is 3 eighths. Or basically one quarter and half a quarter!

Increased demand usually means increased prices and there's no doubt that this is playing a part in what is happening right now. No lender it seems wants to source as the cheapest deal as their service levels drop as they get submerged in excessive mortgage applications.

I adopt a more cynical view. With an upcoming election on the horizon this year it was highly thought the Bank of England's Monetary Policy Committee (MPC) would be under pressure to lower the base rate now we have seemingly hit the expected peak of interest rate rises. For the first time it appears the MPC is showing its independence and acting as it appears fit, for once! It was widely thought the base rate would fall and lenders had priced in 5 base rate decreases from 8 MPC meetings this year. Except inflation is not under the 2% target and shows no signs of meeting that target. The latest round of voting within the MPC shows no clear way of agreeing a way forward with some voting to increase the base rate further but not enough ever for a majority.

I believe the lenders are hopeful and speculate with the way the money is swapped around that there will be decreases by the end of the year. with some lender factoring in 4 decreases in the base rate by the MPC, some factoring in 3 decreases and the majority setting there rates in between which is where I believe the 0.37% increase has come from.

I do not expect any sudden catastrophic rate rises and believe we are now in for a period of stability. This seems to be matched with my clients as I have had a sudden increase on purchase enquiries. Assuming the properties marketed are all appropriately priced these should all become completed sales and we should soon start seeing an increase in property sale transactions which were generally down 20% in 2023 from 2022.

My job is to get the cheapest deal for my client for their individual circumstances. I always advise jumping on rates as soon as I make a recommendation. I honestly have no crystal ball, I can only deal with the information in front of me at any moment in time. Things change very quickly, on a daily basis and its always best to save what I have recommended. Money saved in your pocket is better than interest paid to a mortgage lender. The majority of my clients are coming off 1% to 2% deals so a further increase makes a significant difference to my clients monthly budget.

If things improve and a cheaper rate becomes available, I can always have that discussion with my client about switching to that cheaper deal and with it a cheaper rate. We would discuss this like re credit scoring and as long as my clients are happy, I would then proceed to get the rate changed before completion. For purchase applications we may need to involve solicitors as you would effectively be removing the standing mortgage offer in transaction.

Longer term would things ever get back to record low interest rates from 2009-2021 I believe the lowest they will ever return to is a mid-3% and I am hopeful we will be there in the next couple of years but there as always is no guarantee.

These are all my personal thoughts and opinions held by me. Further discussions of your personal circumstances may be needed to match you to appropriate products.