As we approach Thursday’s Bank of England interest rate decision IFA Magazine’s cohort of industry experts have given their thoughts on what the outcome might be and what impact it will have on the mortgage market.
Thora Kehoe, Chief Product Officer, Smartr365 comments: “Although the inflation rate is slowly falling there are concerns in other areas of the UK economy (such as GDP and wage growth), making it very difficult to call what decision the Monetary Policy Committee might make on Thursday. Indeed, the last meeting – back in September – ended in a very close split decision, with five votes for maintaining the base rate and four for an increase.
“Regardless of the outcome from Thursday, it is vital that the industry continues to develop back-end processes to expediate the process of completing and submitting a mortgage application. Products are still evolving and being repriced quickly, making it vital that we have the tech tools to hand to ensure that applications can move through the funnel as quickly as possible. At Smartr365, we have seen a 30% increase in advisers processing automatic submissions in the last month alone, showing real appetite for time-saving tech tools, and we’re committed to bringing further innovative solutions to market.”
James W Melhuish DipPFS EFA, Senior Financial Adviser at Eppione said: “With both the FOMC and the MPC meeting to decide on future monetary policy this week, the focus will surely be on interest rates. The general feeling is that we will not see further rate hikes in this cycle from the UK or the USA but what we will see is the economic forecasts for inflation, GDP and employment.
“My focus is always on the feeling of the people that we deal with on a daily basis, the ordinary man and woman. Even if interest do not come down in this cycle, a clear positive message from the central bankers will be welcome. As the winter draws in and energy usage increases, people will want to see good news.”
Donna Murray, Owner and Founder of Greenshoots Financial said: “The forthcoming Bank of England (BOE) rate announcement this Thursday holds significant weight in light of the current socio-economic climate,”
“Since the unchanged vote on September 21st, various global events such as the Israel-Hamas conflict and high inflation rates have created a challenging environment for decision-making. The Middle East conflict, along with escalating oil prices, will likely be a risk factor for further inflation. This will no doubt delay the return to the intended 2% Bank target and stall the momentum for possible rate cuts. And for now, the consensus among economists is that the BOE will maintain the 5.25% rate into November.”
“For our customers, stability will be welcomed as it supports borrowing predictability, making it easier for individuals to plan their mortgage payments. Although it may not significantly decrease ongoing payments for existing mortgage holders, this rate hold will foster a more consistent and stable financial landscape for new homeowners. The conclusion here is that potential borrowers can continue to enter the housing market with a degree of confidence about their future repayments.”
Richard Dana of Tembo Money said: “It feels like the rate will stay as is this month and hopefully for the remainder of the year. The lenders are already pricing lower interest rates into their fix-rate deals and this reflects the general market sentiment that the rate rises have started to work. Inflation is coming down and there is now talk of a potential recession again next year. It also feels like the property market has picked up in the last month or so – which is again another indicator of confidence returning.”
Jason Whitehead of Vitality Mortgages said: “This Thursday will see the boe keep the base rate the same with no increase or wishful thinking a decrease.
“Competition in the market place is seeing lenders reduce their rates themselves. While this happens I don’t believe there will be. Reduction in the base rates. As the base rate settles becomes a little more stable the swap rates will reduce or become static this in turn allows the lenders to buy money at a more competitive price this allowing these small decreases in the rates.
“An example of such reduction in rates is. Client with a circa £220k mortgage came to us 4 months ago with a nationwide product we have change the product every time nationwide reduce their rates and as such have saved him around £85 a month.”
