Borrowers are unclear about the future direction of mortgage rates.
While the Bank of England cut interest rates, some lenders have not only failed to pass this saving on to borrowers, they have actually increased rates.
With this in mind, Mortgage Solutions is asking: Has the recent falls led to borrowers seeming calmer, or are there still worries about the increased cost?
And is there a difference in attitude between the various types of borrowers, be they first-time buyers, homeowners or landlords?
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Borrower sentiment certainly seems more confident. During the market slump, our protection sales soared as people looked to secure their finances in unsettling times.
Although marginal mortgage rate fluctuations continue, markets appear to be stabilising and interest rates are lower than they have been in a long while. We’re seeing a pick-up in the mortgage business, and are on a recruitment drive to manage growing demand.
We saw a good number of landlords offloading properties in advance of the much-debated possible rise in capital gains tax (CGT) come the Budget statement – which did not end up happening.
First-time buyers are still struggling to find a robust mortgage that suits their needs. With property prices way exceeding the average income, first-time buyers will continue to grapple to save for a mortgage.
There’s a gap in the market for a reliable, well-built zero-deposit product with a solid tech stack supporting it. Your average first-time buyer is a lot more informed these days, and will make more cautious and considered decisions than perhaps a first-time buyer 10 years ago. They will shop around until they find an adviser and product they can trust.
The ‘Bank of Mum and Dad’ will have its limits, and there is a concern around parents and grandparents jeopardising their future needs by financing a mortgage for their adult offspring.
While the bank rate has fallen, lenders’ interest rates have risen; this again created more panic and uncertainty for buyers and homemovers.
The stress levels are certainly higher after what has been a quiet, calm period leading up to the Budget.
First-time buyers are racing to try to secure property ahead of the stamp duty changes, while those who are remortgaging are a little calmer, not having the tax concern. But they are battling the increasing rates, and this is creating its own vortex of pain.
The role of the brokers has never been so customer-centric. With the ups and downs, brokers have to be more empathetic and able to deal with the emotions of the clients as they go through the highs and lows.
This means dedicating more time to each client to ensure they are constantly being given updates. If the rates change, then we also have to react to them swiftly. It has never been harder than now, in my opinion, to be a broker.
Patricia McGirr, founder of Repossession Rescue Network
The new mantra is ‘reassurance on repeat,’ as mortgage and rate anxiety seems to be the new norm.
Brokers have become part-adviser and part-counsellor trying to navigate through daily changes.
First-time buyers are facing a marathon of budget reviews, affordability checks and, often, difficult conversations about what’s possible.
For existing homeowners whose fixed rate periods are ending, there’s still a palpable concern about affordability and refinancing options.
The impact of ‘rate shock’ is still a genuine fear in family budgets.
With buy-to-let (BTL) landlords, they’re recalculating whether rental income can absorb the costs of refinancing and still turn a profit, with many questioning if they can sustain their portfolios or if it’s time to exit.
The peace of mind offered to borrowers by fixed rates cannot be understated. In this climate, it’s hard to put a price on that.
Despite the Bank of England’s recent bank rate cut, the Budget has certainly spooked the markets, with gilts and swap rates driving up the cost of borrowing.
Borrowers are understandably confused. Many expected the bank rate cut to translate into lower mortgage rates, but instead, we’ve seen quite the opposite, with many mainstream lenders pushing rates up.
Reassurance has become the watchword for us. We’ve spent a lot of time counselling clients through the stress of these fluctuating rates.
First-time buyers, homeowners, and landlords all feel the strain differently, but the common theme is uncertainty.
Meanwhile, the government continues to pat itself on the back for stabilising the economy. Yet in reality, the uncertainty it has created is hindering both businesses and borrowers – the worst environment if the aim is economic growth.
With rates beginning to fall, you’d think borrowers would be breathing a sigh of relief, but the atmosphere is still tense.
Homeowners are cautiously optimistic, but many are still reeling from last year’s rapid rate hikes.
For BTL landlords like myself, the increased cost of financing has eaten into margins, and while rates are softening, it’s hardly a return to the days of easy borrowing.
It’s like offering a soggy biscuit after taking away the cake – better than nothing, but hardly satisfying.
There’s a noticeable difference in the mood between first-time buyers and seasoned homeowners.
First-timers are understandably jittery, still adjusting to the new norm of higher costs.
Landlords, meanwhile, are used to riding the waves but are now laser-focused on protecting cash flow and yields.
During the past year, I’ve found myself in the unofficial role of therapist for my tenants and clients, reassuring them that, despite the chaos, the housing market will bounce back – eventually.
