“The mortgage price war is over”, Mather and Murray Financial independent financial adviser, Samuel Mather-Holgate, has argued as investors mark down their bank rate expectations.
Mather’s comments follow Nationwide announcing that “investors have marked down their expectations for the future bank rate in recent months” in its September house price index.
The lender added that, in turn, this has put downward pressure on longer term interest rates which underpin fixed rate mortgage pricing.
If sustained, this will ease some of the pressure on those remortgaging or looking to buy a new home.
Mather added: “We also must remember that gilt and swap rates aren’t based purely on the central bank base rate, but confidence in the government, which we all know can turn on a dime.
“Until the new year, there may be no new reductions but when they start near the spring of next year there will be a money avalanche and housing costs will be in free fall.”
Exemplar Financial Services director, Iain Swatton agreed: “The recent surge in oil prices has spurred predictions of a base rate increase in November and it’s likely to signal the end of rates cuts for the near future.
“Fixed rates will probably start climbing and so consumers should explore attractive deals now before potential mortgage rate hikes.”
A similar sentiment was shared by R3 Mortgages director, Riz Malik, who said that the swap rates hike at the end of last week is “concerning” given recent reductions, which have led to lenders repricing downwards.
“This reinforces the notion that the euphoria of the hold decision by the Bank of England may be short-lived,” he added.
Additionally, Shaw Financial Services founder, Lewis Shaw, commented: “With the oil price rising, it’s looking like the mortgage rate cuts in September could quickly be reversed.
Shaw added that, if inflation ticks up, then it’s “plausible” there could be a further 0.25 per cent base rate rise in November.
“Whilst gilts and swaps aren’t directly correlated to the Bank of England base rate, they are a great indicator of sentiment,” he added.
“Anyone needing to remortgage may not want to hang about because we’ve no idea how long these rates will be around.”
Meanwhile, Dimora Mortgages director, Jamie Lennox, urged borrower to be vigilant: “For consumers, it might be wise to lock into existing deals before further hikes materialise.
“The evolving economic landscape calls for vigilance and timely action to navigate potential financial shifts.”
However, Yellow Brick Mortgage managing director, Stephen Perkins, urged against panic: “Yes the rise in swap rates will likely slow the rate cuts, as lenders take time to see how deep-rooted the current increases are.
“However, I do not think there is a need to panic if the base rate goes up again, as any increase in November would simply replace the expected rise from September that did not happen.”
