While the economy has certainly been through a turbulent period recently, the early signs of stabilisation we alluded to previously are still present.
On September 21, the Monetary Policy Committee met and decided against raising interest rates for the 15th consecutive time. All indications were that the vote would be tight, and it was with 5-4 voting not to raise rates. Andrew Bailey, the Bank’s governor, has told MPs that UK interest rates are “much nearer” their peak than before, although he stressed all options remain on the table.
Beyond any immediate action on the cost of borrowing, indicators currently point to rates starting to drop early next year, most likely in Q2; this should all be possible, provided rates continue to drop as steadily as they are now. This will be fed by inflation continuing to drop as forecasted.
What does this mean for re-mortgages?
With the worst of the market instability, hopefully, in the past, we’re seeing increasing numbers of lenders start to cut rates to remain competitive, which is obviously good news for borrowers. We receive daily emails from lenders reducing rates, providing more stability to the market.
In terms of lenders, they remain sympathetic after months of economic pain for borrowers, and we’re seeing more and more credit policy revisions putting active help in place, which is encouraging. There is a particular focus on providing options to decrease monthly payments to make loans more affordable in the short term, including offering interest-only deals or the ability to borrow over a longer period.
Tracking trends
Many clients continue to opt for tracker rates as they offer flexibility to lock in a very competitive margin, and with the expectations for the base rate to start dropping over the next 6-12 months, this is a great opportunity to feel the benefit of a reducing rate for a while until the fixed margins are lower and then, if you did want long term security, switch to a fixed product as rates drop.
As always, the Henry Dannell team is here to provide expert advice and guidance which will enable you to make informed decisions. Get in touch with us to find out more about our offering and how we can help you achieve your mortgage goals.
Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Henry Dannell is part of the Partners& ecosystem. For further information, please contact Courtney Flockhart, specialist credit adviser, Henry Dannell, courtney.flockhart@henrydannell.co.uk or t: 0204 599 9357,
m: 07931 250 307