Mortgage Force

Apply Now
Apply Now
A Word on the Mortgage Market – Jan 2022

A Word on the Mortgage Market

Hello and welcome to the first edition of A Word On The Mortgage Market for 2022.  On that note, let’s hope that this year is considerably better than the last two.  We’ve probably got this out just in time to wish you a Happy New Year. Just.

Of course, we ended 2021 with the first rise in Bank Rate for over three years. In this edition we are going to explore what that means for you and what we can expect from the mortgage market in the coming weeks and months.

Interest Rates

It probably helps to begin with a big shot of perspective, something that some in the media often seem to struggle with. Many people could be forgiven for thinking Armageddon is descending when you read headlines of rates increasing by 500%. But of course, the devil is always in the details. That 500% increase referred to the Bank Of England Base Rate increasing from 0.1% to 0.75%; hardly something to hit the panic button over.

Even with rates moving from 0.1% to 0.25%, we are still, if you’ll excuse the statement of the obvious, in an environment of incredibly low rates. And, whilst that may not be the last rise we see this year, we can’t see Bank Rate anywhere north of 1% by the end of the year. If you look at the markets, they seem to be expecting another rise of 0.25% in March and then a few more nudges to potentially 1% by the end of the year. Again, to be clear, this is still incredibly low.

Given what we’ve all been through and what we continue to go through, we wouldn’t ordinarily expect rate rises in any form, but the Bank is concerned about inflation. It has a target of 2% per annum and the last reported figures revealed it was running at 5.1%. For those of us who put petrol in our cars, heat our houses and eat food, that’s probably of little surprise.

But what does this mean for mortgages?

Despite what we’ve said already, we expect lenders to remain ultra-competitive on their mortgage product pricing because they still have targets to hit. The house purchase market may naturally not be anything like as buoyant as it was last year because of the Stamp Duty holiday  –  though the lenders’ collective forecasts for 2022 are actually higher than they were in 2019, before the pandemic.

Because of this, we think there will be a big focus on the remortgage market. This means great products and great rates. What it also means is that you should not accept product transfer offers from lenders without seeing what else is out there. There are over 100 lenders in the UK mortgage market, with thousands of products, so there’s plenty to choose from.

Of course, we would say this, but that is where a good independent mortgage broker comes into their own. We always believe that we are the right route to take but now, more than ever, that’s true. Your broker will work with you to understand your current position, find the most appropriate deal for you and then do all the hard work to see it through to completion.

As with most things in life, timing is key. If your current deal is due to expire in the next six months, then acting now makes perfect sense. Funds can often be RESERVED in advance, and that means locking into rates at today’s prices. Even if you are not due a new deal for the next six months, we’d still recommend starting the process in the next few weeks .

Get in touch with your consultant, whose details you will find below, if you’d like to start the process.