Market Uncertainty

You may have noticed that the mortgage marketplace has been nothing short of crazy recently, so I just wanted to put something out there to reassure you that we’re still here to help and we are keeping a close eye on things.

So, what’s been happening?

In a nutshell, the Bank of England is still under pressure to tackle inflation and has increased the Base Rate again by 0.5%.?There were talks of further increases off the back of the mini budget announcements as some experts feared this would spark inflation further.?A view was then taken on the UK economy that caused swap rates to increase dramatically meaning that the cost of lending for banks increased to new highs.?As a knee-jerk reaction, several big banks withdrew some or all products and people started to panic.?

For us, this wasn’t the first time that we had seen so many lenders withdraw their products, we, therefore, knew that they would come back, and they have.?We saw this in the wake of the pandemic as lenders took time to reassess their strategies and risks of lending in an uncertain market.?Every lender’s appetite to risk is different, some lenders will have protected themselves and hedged their costs more than others so although we’ve seen an overall increase in rates due to the Bank of England rise, it isn’t the same across the board as lenders are also always competing for business.?We were still seeing some lenders offer rates that were broadly in line with where they had been on some products even after these announcements as they would have taken a more speculative view on it, willing to take some of the risk to get more business.

Thankfully, the mini budget plans to cut tax were later reversed and stability has somewhat returned to the ￡, however sadly, it is almost impossible given everything going on in the background with the war in Ukraine, cost of living crisis and inflation to predict when full stability will return.?However, what I would stress to clients is don’t panic!?There has been a lot of scaremongering about rates being as high as 10% right now but to reassure you no one in my team has written a mortgage at a rate anywhere near as high as that at least for now anyway.?

Some are also worrying that this is a market crash similar to 2008.?It isn’t the same scenario, lenders aren’t running out of money, they want to lend.?We haven’t seen rates going up by over 2% right across the board, we have definitely seen a squeeze in rates on some products (mainly those at the lower loan to values where customers have more equity in their homes or more deposit) but it is in the interest of lenders to keep the market moving and to still lend and not to make it impossible for first-time buyers to get onto the ladder. Are rates likely to continue to rise for now, yes as it’s unlikely that all things will be sorted anytime soon.?The problem is that we have become accustomed to lower mortgage interest rates.?If we think back, these rates were put in place to encourage spending back into our economy, however, rates have been a lot higher in the past.?Granted on top of the current cost of living crisis this is not what we need as we fear for our lack of disposable income.?If anyone is worried about this, I would urge you to seek advice.?When it comes to your mortgage, we will make sure that your mortgage is affordable.

The most important thing to remember is that we are here as advisers to help guide customers on what is best to do, and we will continue to advise based on what we are facing and what we know at the time.?There are still products available right now, lots of fixed rates, we will still consider our clients’ individual circumstances and preferences, and we will navigate the risks together. There are over 600,000 fixed rate mortgage deals coming to an end this year.?If your deal is coming to an end within the next 6 months, I’d encourage you to get in touch now before we see further increases as unfortunately right now as things stand, and without having a crystal ball, they are likely to be inevitable.?

If you are looking for mortgage advice, contact us today on 0141 471 4545 or visit https://mortgage.yourexpert.co.uk/

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