Rising buy-to-let mortgage rates and a sharp drop in product choice, highlighted by Moneyfactscompare.co.uk, are creating a more complex and time-sensitive market for brokers and their clients.
In the following piece, Rachel Springall, Finance Expert at Moneyfacts, explains how these shifting dynamics are reshaping the role of brokers in an increasingly volatile landscape.
Brokers play an integral part in the process of supporting borrowers; they are the anchor in a volatile market. Borrowers would be wise to approach a broker as the first port of call to navigate the mortgage maze, as they have proven their worth through times of uncertainty. It can be hard for consumers to decide what kind of mortgage works best for them, but a broker does the hard work to make the process as smooth as it can be and will be primed and ready to contact their customers when they need to renew their mortgage in two years or more.
Behaviourally, borrowers in the UK tend to opt for a two- or five-year fixed mortgage, and while we have decade-long fixed deals, they are not really that popular by comparison. We are very different to other countries where they have much longer-term fixed mortgages, say 30 years, so borrowers don’t feel the short-term spikes in volatility overseas as much as we do, because they are locked into a rate for much longer.
The appetite for a longer-term fixed deal could change over time, but we have had unprecedented shocks over the past six years alone, which will weigh heavily on the minds of borrowers. The first UK lockdown in 2020 and the mini-Budget in 2022 were two very different situations that caused chaos in the mortgage market. The lockdown led to a standstill in 2020, and the loss of market confidence in 2022 saw both mortgages pulled overnight and fixed rates soar.
In 2022, brokers were on the front line to support their clients with hikes to interest rates, as hundreds of products were pulled from sale. Brokers work incredibly hard to keep on top of a volatile market, as speed and support are of the essence to secure a mortgage.
Fast forward to March 2026: in less than four weeks, around a fifth of residential mortgage products vanished, and those slowly returning do so at higher rates. The buy-to-let mortgage market has faced a similar contraction of options, and higher rates will put further strain on landlords, potentially causing cost rises for their tenants. Lenders have been rushing to reprice their options amid uncertainty surrounding the future path of inflation and interest rates. The unrest in the Middle East is the cause, leaving borrowers highly exposed to interest rate volatility over the shorter-term.
The temptation to secure a shorter-term deal may remain, but due to the path of swap rates, the two- and five-year fixed rates have inverted, where five-year is slightly cheaper on average. This abnormality happened after the fallout from the mini-Budget, and it took around three years for the inversion to end. No one has a crystal ball to predict where rates will end up, but the most appropriate mortgage term comes down to a borrower’s outlook on whether their circumstances might change in the shorter-term. As an in-between, some might want to secure a three-year fixed deal, and those who have no plans to move might even opt for a ten-year fixed.
Unfortunately, the magnitude of churn in product choice and rising rates causes a huge flurry in applications to process to meet fast-paced deadlines for submissions. Missing the boat could mean hundreds of pounds more on someone’s mortgage every year, so it will be wise for any borrower to get their paperwork all together way before their current deal is due to expire. Brokers can also provide a helping hand to compare options should a borrower wish to remortgage with their existing lender, and in such a volatile market, some may wish to lock in a few months ahead before their current deal expires.
In recent months, speed has meant everything. Back in February, the average shelf-life of a deal was around 15 days; this was due to favourable repricing. All expectations were on a Base Rate cut, not the prospect of a rise, and yet, the impact of shocks overseas is being felt very close to home. We are in a similar position to Italy with our reliance on gas, so we are rather exposed to supply issues. The fears of a rise in energy costs this summer are expected to hit the cost of living, so budgeting to manage essential outgoings is wise.
In a volatile environment, it is important for borrowers to feel supported. Under the Mortgage Charter, there are residential mortgage lenders which can offer temporary options to help their customers keep on top of repayments. These can be either extending a mortgage term, to lock into a new deal six months in advance or switch to interest-only payments temporarily. However, if borrowers can run through their options with a broker, they could stand to find a better deal by looking beyond their existing lender.
