Despite the ups and downs of the world’s money markets, today the UK Mortgage market seems to have remained relatively calm. Swap rates continue to fall gradually, lenders are cutting rates, and the Bank of England remain positive yet cautious with further cuts to base rate expected as the year goes on.
This positivity is resonating with customer as well. House prices are increasing with some commentators being more bullish about this year’s growth. A greater number of new properties are being built. Mortgage applications are increasing both in purchase and remortgage. Competition amongst lenders through pricing and better criteria to ensure they take their desired share of this growth is hotting up, leading to better options for customers, all of which supports the view that 2025 will be a good year in our industry.
But are customers taking the right product option for them?
The demand for fixed rates products remains as high as ever, over 90%, as the majority of customers want certainty, but there has been an increase in demand for 2-year products as customers seek short term certainty with the hope that rates have declined further by the time they get to the end of their product.
However do tracker products offer a better opportunity for some customers? Some customers will naturally believe that base rate may be cut a further two or three times over the course of this year as industry commentators have suggested, and will want to maximise the opportunity of declining rates.
Whilst the High Street lenders will offer tracker rates, it is the building society sector that could provide the best options. These lenders, often overlooked by brokers, offer different criteria and flexibility through hybrid solutions, and whilst can’t always compete with the larger lenders on fixed rate pricing, they can offer more competitive rates, some with no ERCs, in the tracker sector. This provides great opportunities for those customers wanting to take advantage of falling rates.
But customers are not always aware of these products and opportunities. Brokers need to be more aware of what these Building Societies offer to ensure their customer don’t miss out and get the best advice and outcomes. Tech can highlight these lenders, but having a conversation with them can bring so much more value.
Danny Belton is currently an industry consultant
