Is the mortgage price war really over?

On the one hand there are good signs for the housing market – no substantial change recorded in the latest Nationwide index, inflation dipping and Bank Rate on pause for now at least.

On the other hand there’s fear that due to higher oil prices filtering through, there may just be one more rate rise next month, with swap rates being volatile as a result.

What are brokers’ views?

Samuel Mather-Holgate of Mather & Murray Financial says: “The mortgage price war is over.” He’s supported by Iain Swatton of Exemplar Financial Services who comments: “The recent surge in oil prices has spurred predictions of a base rate increase in November and it’s likely to signal the end of rate cuts for the near future. Fixed rates will probably start climbing and so consumers should explore attractive deals now before potential mortgage rate hikes.”

Riz Malik, director of independent mortgage broker R3 Mortgages agrees: “The hike in swap rates towards the tail end of last week is concerning given the recent reductions, which have led to lenders repricing downwards. This reinforces the notion that the euphoria of the hold decision by the Bank of England may be short-lived.”

Much the same verdict was reached by Lewis Shaw of Shaw Financial Services. “With the oil price rising, it’s looking like the mortgage rate cuts in September could quickly be reversed. If inflation ticks up, then it’s plausible we get a further 0.25 per cent base rate rise in November. Whilst gilts and swaps aren’t directly correlated to the Bank of England base rate, they are a great indicator of sentiment. Anyone needing to remortgage may not want to hang about because we’ve no idea how long these rates will be around.”

Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management also suggested lenders could be more cautious in October, but that the one factor acting in borrowers’ favour is lenders fighting for market share. She adds: “The excitement over sub-5% mortgage rates may be shortlived if swap rates continue to edge up, as they did at the end of last week. We may start to see more cautious repricing until we receive the inflation figures in October and the Monetary Policy Committee meets again in November. However, the saving grace is that lenders are still desperate to do business and get as many applications in while they can still service the demand.”

Meanwhile, Jamie Lennox, director at Dimora Mortgages urges borrowers to be vigilant: “For consumers, it might be wise to lock into existing deals before further hikes materialise, capitalising on current rates amid looming uncertainty. The evolving economic landscape calls for vigilance and timely action to navigate potential financial shifts.”