Advisers share their insight on movements in the marketplace
At a time of notable fluidity in the economy, both domestically and internationally, all eyes are on what the mortgage market is doing, and who better to gauge the twists and turns of the sector’s fortunes than those at the metaphorical grindstone?
Arguably, as professional monitors of the mortgage marketplace, brokers will be among the first to spot emerging trends, so what are they seeing in the market currently?
David Hollingworth (pictured left), associate director of L&C Mortgages, points out that rates are always one of the first things that a customer will want to know about. “Fixed rates have been improving with a lot of repricing activity from lenders looking to sharpen up their best rates,” he told Mortgage Introducer. “Good news for borrowers, but this does mean that advisers will be busy helping customers keep on top of the best rates and move on to more favourable deals where possible. Although there’s been a reduction in rates and that is continuing to feed through, there have been a few signs of some rates being increased.”
Nerves in the market have been calmed following the UK and US trade deal and negotiations between China and the US over tariffs, Hollingworth added. “That could reduce the need to cut interest rates as quickly, and consequently put a hold on the downward trajectory of fixes,” he reasoned. “When rates are falling, it’s understandable that borrowers can hold off in the hope of lower rates coming through. With so much uncertainty still in the air, that could be a risky strategy for borrowers.”
Competition between lenders is fierce, as evidenced by the recent rate cutting, said Hollingworth. “However, that is not the only battleground and lenders have increasingly been reducing their stress rates to boost their affordability,” he noted. “This is significant news for borrowers and advisers alike, and should help more reach the borrowing levels that they require. That will be particularly important for first-time buyers but should equally have benefits for movers and remortgage customers. Two-year rates are now hitting the same level or undercutting five-year deals. That could see more customers drawn to the lower, short-term rates. There’s already been more deciding to take that approach in the hope that interest rates will fall as predicted, giving the chance of moving onto a lower rate at that time.”
Hollingworth added: “Of course, there are no guarantees and advisers will play a key part in highlighting the need to consider whether longer term security would be more appropriate. Those stretching to borrow larger amounts could be served better by knowing where they stand for longer, whether that is for five years, or for 10 years, or longer.”
At the same time, he observed, there may be more borrowers considering whether a tracker deal could be a good option. “ As the base rate falls, the margin between trackers and fixed deals will narrow and those who can afford to deal with fluctuation in rates may see trackers as a good option,” Hollingworth said.
Chris Wade (pictured second from left), a mortgage and protection adviser, notes that at the turn of the year and into Q1, he saw a noticeable influx of Right to Buy enquiries. “This was largely driven by clients who took advantage before the changes introduced towards the end of 2024, enabling them to access larger discounts before starting the mortgage application process this year,” Wade said. “First-time buyer activity remains strong, supported by innovative product offerings from lenders such as Skipton, Leeds, Accord, and Gen H, who are providing some excellent options for FTBs.”
Remortgage business is meanwhile steady and gradually increasing since the base rate dropped, Wade observes. “Many of my clients lead busy lives and prefer to rely on a trusted broker to handle the process for them, which has helped drive demand even on simple product switching,” he said. “Buy-to-let, on the other hand, has noticeably slowed, understandably so, given recent Stamp duty changes and the tightening of requirements – EPC, for example, along with enhanced tenant rights.”
Read more: Why the BoE's base rate cut is more impactful for the mortgage market than tariff changes
A boost to commercial enquiries
Sam Hutchins (pictured second from right), a specialist property finance adviser with Blueberry Specialist Lending, has seen an increase in commercial enquires. “From speaking to lenders and other brokers in the industry, I believe this is one a lot of people are seeing at the moment,” Hutchins said and identifies an increase in re-bridging. “Naturally, with the position of the market over the last few years, exiting bridging loans have become notably more challenging,” he noted. “Struggling to sell, build times and costs, and issues with refinancing are just some of the reasons why I believe we are seeing more re-bridges.”
Underwriters’ requests for information to satisfy a case seems to be growing, from Hutchins’ perspective. “Whether this is down to lenders restricting criteria more or other reasons I am unsure, it’s just a trend I have noticed,” he said.
A senior mortgage adviser at CARA Mortgage Services, Neil Renwick (pictured right), commented: “I am seeing an increase the number of people looking to become first-time landlords via a limited company structure as they see it as a longer-term strategy for building an income in retirement and for inheritance and legacy planning, with no guarantees of the state pension or employer based pensions supporting them and interest rates on savings dwindling. Obviously it’s not one size fits all, and I’d always recommend they speak to an accountant about the best way to make the purchase. I think it is also down to the rise in property gurus offering courses on getting into property.”
Ying Tan, CEO of digital brokerage Habito, notes the impact of what he perceives as an aggressive tax regime on buy-to-let. “There's definitely a swing towards company buy-to-lets now over individuals, but to be fair, that has been that swing has been happening for some time,” Tan commented. “First-time buyers looking to buy property have that flexibility. They're not as London-centric as they were, because of remote working and are happy to live a little bit further out, but they still want to be close enough to London. But the ability to work from home two or three days a week, gives people flexibility.”
In Tan’s view, the trends demographically are changing a little, but the desire for home ownership is still very strong amongst the younger generation. “We need, as a country, to build more houses and make it more accessible and more affordable for everybody,” he said.
