An early review pays off

We’re all adapting to a new normal as global pressures see lenders repricing mortgages, however, locking into a rate now could save money says Enzo Mora CEO and founder of The Mortgage Brain

Credit it where it’s due, we were encouraged to hear that our Chancellor Rachel Reeves met with the six largest banks and building societies and UK Finance to discuss the outlook for mortgage rates in light of the conflict in Iran and the practical support available to concerned borrowers. Representing 75% of the mortgage market, the lenders have reaffirmed their commitment to the Mortgage Charter to proactively contact 1.6 million customers whose fixed-rate deals end between now and the end of the year. The Charter sets out customers’ options or how to access bespoke support well before the payment changes. It also offers a temporary breathing space, including a move to interest-only payments for six months for customers who are up to date with their payments without a new affordability check or affecting their credit score. Although around 86% of mortgages on fixed rates, most borrowers are not under immediate pressure from short-term market moves.

Early reviews pay off

We take our regular client product reviews very seriously starting conversations around six to seven months in advance of a fixed rate ending. At this time of global uncertainty we want to secure the best rate early for our clients now, then if rates reduce during that period, we can search the market again to see if a lower rate is available. This also works the other way if rates rise, we will have secured a deal at today’s price. Either way it could save money for the borrower and we’re pleased to get positive feedback on the benefit and certainty this brings.

Outlook for interest rates

Nationwide’s latest House Price Index says UK economic growth is likely to be slower and inflation higher than previously expected due to the Middle East conflict although the impact will depend on the duration of the shock as well as policy response. The outlook for interest rates is particularly uncertain and dependent on whether the demand or supply side of the economy is more adversely affected. The lender believes that while swap rates (the interest rates that banks charge each other for borrowing) have risen noticeably, to date the increase is much less pronounced than in the aftermath of the pandemic.

Over 60s benefit from property wealth

Homeowners aged 60 plus are sitting on an eye watering £3.84trn worth of property, accounting for 55% of the UK’s housing wealth says property agent Savills. The figures show that £2.92trn is held in main residences, £620bn in buy-to-let investments and £290bn in other residential holdings. Over 60s account for the highest share of housing wealth in the South West and North East at 60% although homeowners in the South East hold the highest value at £602bn. This figure is as much as the North West, Yorkshire and Humber and Scotland combined. In London there are fewer older homeowners but they still hold property worth £428bn, totalling more than £1trn in the capital and South East. These statistics point to the passing of equity between generations remaining an important feature of the housing market in coming years.