IntroducerToday asks the question many people are wondering about: “Is the mortgage price war really over?” To answer that, they explore market indicators, future predictions, and the opinions of experts.
A Snapshot of the Current Climate
What’s the current state of the housing market? In the recently published Nationwide index, there’s no significant change. This, combined with a decrease in inflation and a pause in the Bank Rate, appears to paint a stabilised picture.
However, the market’s mood points towards an element of unease. With increasing oil prices trickling through, rumours are brewing of another rate rise next month. Consequently, swap rates — the interest rates that financial institutions use to calculate the price of derivatives — are showing signs of volatility.
What Does the Broker Community Think?
Industry insiders, the brokers, have a unique vantage point on these changes. Samuel Mather-Holgate of Mather & Murray Financial posits an absolute stance, stating, “The mortgage price war is over.”
His viewpoint is echoed by Iain Swatton from Exemplar Financial Services, indicating that rising oil prices might lead to a base rate increase next month. He suggests that reductions in mortgage rates might be reaching an end, with fixed rates likely to escalate. As such, consumers are advised to secure attractive deals promptly, before potential mortgage rate hikes ensue.
The Role of Swap Rates
To provide some context, R3 Mortgages’ director, Riz Malik, raises concerns over the recent spike in swap rates which followed significant reductions, resulting in lenders decreasing prices. He underlines that the excitement generated from the Bank of England’s hold decision could be ephemeral.
Lewis Shaw of Shaw Financial Services aligns with this perspective. He foresees a reversal of the mortgage rate cuts experienced this past September due to rising oil prices. In case of a further 0.25 per cent base rate rise in November, those requiring a remortgage should act swiftly to leverage current rates.
How Are Lenders Responding?
Katy Eatenton, a specialist at Lifetime Wealth Management, anticipates lenders will adopt a more cautious stance in October while awaiting inflation figures and the next meeting of the Monetary Policy Committee in November. However, she highlights a unique factor that could benefit borrowers: competition among lenders for market share. Amidst the rising rates, lenders are keen to secure as many applications as they can.
A Call for Vigilance
Finally, Jamie Lennox, director at Dimora Mortgages, urges borrowers to be attentive and act in a timely manner to navigate potential financial shifts. To maximise the benefits of current rates, he suggests locking into existing deals before any further rate hikes materialise.