What is happening in the mortgage market?

1^st November, 2022

We asked Matt Hays director of Expert Financial, our mortgage partners for 15 years now, his thoughts on the current mortgage climate…

“So, it’s fair to say it’s been a turbulent few weeks in the mortgage market, and the financial markets in general! 

Most people looking for new mortgages have seen significant increases in interest rates since the start of their search.  We’ve had many an “emergency application” at Expert Financial where we’ve been given less than 5 hours notice from lenders that rates will be increasing.  In many circumstances, we’ve been able to speak to clients, get all required documents from them and get applications submitted within this small window to ensure the best possible outcomes.

We’ve had clients coming to us for advice on all types of mortgages from shared ownership mortgages, to equity release, and people remortgaging who were checking that their existing deals were the best on offer. It felt like everyone in the market wanted reassurance or further information on financial products.

Luckily for everyone, this seems to have calmed a little in the last 2 weeks with some lenders actually reducing all their fixed-rate mortgage interest options. We’re also getting the “normal” notice period from lenders now with most of them giving us 48 hours before moving rates upwards.

Everyone is expecting an increase in the Bank of England Base rate this week and we’re getting lots of enquiries about how this might affect fixed rates in the near future.  In short, the answer is “not very much”.  The longer version is more like this:

A large (but not sole) contributing factor to fixed mortgage rates is UK Swap Rates. A large amount of mortgage lending is funded by lenders trading in the UK Swap Market which, last year, they were able to buy money in at around 1%.  They would then add their margin to this and sell to consumers in the way of fixed rate mortgages in the 1-2% bracket.   The last 12 months have seen these swap rates increase to over 5% (at the time of writing) which is why lenders are having to charge more to their mortgage customers.

The market is still quite volatile, compared to the previous few years, so we can’t predict what’s next.  There’s never been a better time to use a mortgage broker.  Lenders are changing their deals so often right now you just can’t be sure who’s offering the best rate unless you talk to someone who’s looking at the whole market. 

As always, feel free to get in touch with me or the team at Expert Financial for some free mortgage advice.

Matt”

If you would lke to arrange a chat with Matt or one his his professional whole of the market mortgage brokers, please email us at team@harveyrobinson.co.uk and we will schedule it in for you.