Mortgage adviser says political pressure on the Bank of England is distorting lender pricing and making her job harder every day
Andy Burnham would struggle to show his face in Parliament if the Bank of England raises interest rates, and that political reality is now shaping the entire pricing landscape for UK brokers.
That is the view of Nouran Moustafa (pictured top), executive financial and mortgage adviser at Roxton Wealth. She said the prime minister’s cost-of-living platform has made a rate rise politically toxic, leaving the Bank of England caught between Westminster pressure and a mortgage market in pricing chaos.
With Burnham having taken office in July and making the cost of living the centrepiece of his government's agenda, Moustafa argued any upward move on rates would be politically devastating for him.
"I don't really think he will be able to show up to Parliament if the Bank of England base rate goes up, because now he has taken the role of the country hero that's lowering the cost of living," Moustafa told Mortgage Introducer. "He speaks all day about cost of living. It's impossible to raise the Bank of England base rate when all day you speak just about cost of living."
Does a base rate hold actually help borrowers?
The Bank of England held its base rate at 3.75% at its July Monetary Policy Committee (MPC) meeting. Moustafa said the hold – however politically convenient – is creating a damaging disconnect for borrowers. Clients arrive expecting rates close to 3.75%, only to be told by lenders the best available is closer to 6%.
"People are a bit disappointed, confused, and they don't really understand what's happening," she said. "They come in under the expectation that the base rate is 3.75%, and then all of a sudden, they realise it’s, ‘Sorry, we can't do 3.75%, we can only do 6%’. We just have to tell them to ignore the Bank of England base rate, and we just follow the lenders."
Moustafa is clear political interference in monetary policy is wrong in principle. "From the start, putting pressure on the Bank of England is wrong. Absolutely wrong. It's not the right economic decision. We shouldn't be doing that. It should run independently."
But she does not believe independence will necessarily win out. What she sees instead is a standoff. "We are going to see whose pressure is higher. Can banks put on more pressure, or can Westminster put on more pressure? We will just find out."
What does lender fragmentation mean for brokers?
With the MPC holding firm, individual lenders have broken from any semblance of a coordinated pricing cycle. Moustafa said some are raising rates, some are cutting, and the pattern shifts daily. For brokers already contending with the turbulence gripping the UK mortgage market this year, the picture she paints will be familiar.
"Every lender just wakes up in the morning and decides what do they want to do," she said. "Some people are going higher, some people are going lower. They are just all over the place."
The operational cost for advisers is real. Moustafa described a buy-to-let case that had been placed with one lender – illustrations produced, presentation meeting completed, the process well under way – that had to be restarted from scratch when a rival lender moved its rates to a level she described as significantly lower. Landlord clients in particular, already navigating a more complex regulatory environment around buy-to-let mortgage affordability and stress testing, are among the most exposed to this kind of mid-process disruption.
"We had to scrap all the work we have done and just repeat the whole process from the beginning all over again," she said. "Send out another valuer and get another hard credit check on his credit file so we can make use of this significant difference."
The days of a predictable, sector-wide repricing cycle – where one lender moving was a reliable signal that others would follow – are gone. The Financial Conduct Authority requires lenders to treat customers in financial difficulty fairly, yet no regulatory framework compels consistency in how lenders price day to day, and that gap is precisely where the volatility lives. It is a fragmentation that has become one of the defining features of the UK mortgage market through the current rate cycle.
"Previously, if Barclays is putting the rates down, NatWest will be doing the same, Nationwide will be doing the same, Halifax will be doing the same, and it’s happy days, we are all in the same queue," Moustafa said. "Right now, you just don't know what's happening. Instead of switching people to a lower rate with the same lender, we are inventing a whole new thing."
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