“Emergency rate rise will be an enormous shock for many borrowers” say mortgage experts

by | Sep 26, 2022

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With the odds of the MPC hiking rates again in an emergency meeting this week shortening after Sterling’s all-time low against the Dollar, IFA Magazine asked mortgage experts and brokers if they have seen lenders preemptively hike rates this morning, or a surge in house buyers rushing to lock into fixed rate mortgages before rates potentially rise further.

Michael Webb, Managing Director at Brandon-based Mortgage Republic: “The mortgage market, so far at least, did not panic on Monday about the prospect of an emergency Bank of England interest rate meeting. We did not see rates being pulled or any unexpected notifications of impending rate changes. Equally, our clients have not been coming to us worried about the prospect of a emergency rate rise. In part, this is because the Bank of England base rate has been stable for so long that we have a whole generation that does not realise an emergency meeting can be called, and rates increased sharply at the drop of a hat. Most are expecting the next increase at the scheduled November meeting, but it may come sooner than that, potentially this week. If an emergency rise does occur this week, it will be an enormous shock for many borrowers and could hit property market sentiment hard.”

Manooch Suree, director at Uxbridge-based mortgage broker, Zinga Financial Servces: “We are seeing house buyers and people with existing rates ending soon locking into rates with urgency anyway, regardless of a potential emergency rate meeting this week. Mortgage rates have never been flashing so loudly on people’s radars. If rates were to rise again after an emergency meeting, it would lead to an even greater rush of activity in the mortgage market. It may also bring the the purchase market to a grinding halt due to fears of what could happen next. We are in a highly fluid mortgage market now, with conditions changing by the day. People like certainty and there’s not much of that right now.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “This week is about to come off its hinges as borrowers rush to try and lock into a new deal before another base rate hike tightens the screws even further. The dire economic outlook has been fuelled by the pound dropping faster than a student at freshers week. If things continue, we’ll be cap in hand to the IMF by Friday. It’s about to get spicy and we’re approaching the end of the roll.”

Anil Mistry, director at Leicester-based RNR Mortgage Solutions: “As of Monday morning, there were no updates in my inbox from lenders about their rates changing. However, this further highlights the urgency from all brokers where a client’s deal is ending in the next six months, to speak to their clients as soon as possible to have their mortgage and circumstances reviewed. Therefore, a new rate can be secured prior to any further increases of the Bank of England and in turn the lenders increasing their rates.”

Robert Payne, director of Bristol-based Langley House Mortgages: “Borrowers are already in a state of panic and have been for a while now so the threat of further rate rises doesn’t seem to have had any further impact. Lenders have been quiet this morning but this is off the back of huge rate rises last week so perhaps they have already priced in anticipation or perhaps we will see further rate rises soon. Either way the situation for borrowers is looking less favourable.”

James Miles, director of Exeter-based broker, The Mortgage Quarter: “The pressure cooker is about to pop. We’re seeing borrowers strongly re-evaluate their lending options, with lenders hiking rates quicker than the Bank of England can arrange another knees-up to pick their new rate out of thin air. Clearly, lower income borrowers are panicking and are very concerned, so much so that many are paying Early Repayment Charges to fix a deal before their current one is up for renewal. We need leadership from the Tories and some sensible policies, but both are sorely lacking.”

Graham Cox, director of Bristol-based Self Employed Mortgage Hub“We had a mixed bag on Monday following the slump in Sterling and increased likelihood of a rate rise. Some of our self-employed clients are now holding off buying, either because they think property prices will fall, or just because they’re lacking confidence amid the broader economic outlook. But other clients are desperate to lock in a lower remortgage rate now before interest rates soar to the moon. And this time they may not come back.”

Jamie Lennox, director at Norwich-based mortgage broker, Dimora Mortgages: “Many homeowners are already finding themselves just being able to tread water with the recent rate rises. However, any further rises could see hundreds of thousands of people being dragged into the deep. We’re yet to see lenders make a move and increase their rates even further but if the Pound continues to slump the chances of intervention are looking more and more likely. Mortgage holders with a mortgage due for renewal in the next six months can’t afford to bury their heads in the sand and, if they haven’t already, need to get their foot on the pedal to get that next mortgage secured.”

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