No change in interest rates disappoints mortgage market: mortgage & property experts share reaction -

"Bank Of England Maintains High 5.25% Interest Rates, Pressuring UK Mortgage Holders And Property Market"

The news from yesterday reported a decrease in inflation to 3.4% for the year until February's end. This small improvement raised the possibility that the Bank of England might start reducing interest rates, even though they've made it clear in their recent statements that they are waiting for a consistent period where inflation aligns with their target level of 2%.

What is the implication of the recent announcement that the interest rates will remain unchanged on mortgage and housing markets, as well as borrowers facing financial difficulties today? Here are some insights that various experts have conveyed to us:

Following the Bank of England's announcement regarding interest rates, Propertymark's CEO Nathan Emerson gave his opinion on the matter. Emerson stated that the Bank of England anticipated that inflation levels would drop to pre COVID-19 levels by the upcoming summer. Despite the rising interest rates, there are no signs of a decrease in people buying their first home. Propertymark's recent report showed a 120% increase in potential buyers' registration. With the increasing optimism and momentum in the market, there is a need for interest rates to decrease to enable buyers to afford more and thus have more options when it comes to moving.

The CEO of Market Financial Solutions, Paresh Raja, mentioned that despite the inflation data from yesterday not changing much, the property market has been positively impacted by the steady base rate. With mortgage rates decreasing and an increase in demand from buyers, the property market has experienced growth in house prices, leading to a strong start to the year.

It's evident that buyers are adjusting to the increase in interest rates, and lenders are becoming more daring with the rates and products they provide. This is significant because even if the Bank decides to reduce the base rate, we must acknowledge that interest rates won't decrease as rapidly as they rose initially. Therefore, the market must adapt to a new environment of interest rates.

It appears that the property market is experiencing a positive shift, despite inflationary pressures and uncertainty surrounding elections that may slow down progress. There is a general feeling of greater confidence and hopefulness present.

The spokesperson of Spicerhaart and Just Mortgages, John Phillips, expressed disappointment in the Monetary Policy Committee (MPC) for not taking advantage of the chance to make the initial reduction to the base rate. This regret is especially applicable in light of yesterday's news and the increase of inflation in the economy. Although the central bank must ensure carefulness in achieving their goal of 2% inflation, it's imperative they don't hinder economic growth by delaying decisions.

Today, if the base rate had been lowered, it could have boosted the market's confidence and potentially addressed the affordability difficulties faced by many. However, with the rate remaining unchanged for the fifth time, it brings stability. Yesterday's announcement about inflation could also positively affect swap rates, which may allow lenders to adjust their rates, even if only slightly.

In the absence of any involvement from the Government in the latest budget or any change in the base rate, brokers must focus on the fundamentals, put in the hard work, and provide outstanding service to maintain this confidence and meet the increasing demand to get back on track with moving plans.

Quilter Cheviot's head of fixed interest research, Richard Carter, stated that the Bank of England's decision to maintain interest rates was predictable and in line with the Federal Reserve's actions. The majority of the Bank's policymakers decided to maintain the current interest rates, with only one member calling for a reduction, indicating that a shift in policy may be on the horizon.

Yesterday, the rate of inflation dropped to 3.4%, which is the lowest we have seen since September 2021. However, the journey to get to this point has not been easy, and we still need to do more to meet the Bank's target of 2%. Wage growth, particularly in the service sector, has been a significant contributor to inflation. Although it is slowing down, it will still make it harder to reach our goal. We can see that the UK has already come out of the recession it experienced at the end of last year, with a return to modest growth. Therefore, the Bank has reiterated that it will base its decisions on data until it is confident that inflation has dropped sufficiently and will not increase again.

However, the Bank of England can now have some assurance that the inflation rate is starting to decrease with the latest data released yesterday. Additionally, since the 12% reduction on energy price caps is scheduled to start in April, the Bank may experience mounting pressure to initiate reductions. Yet, the Bank is faced with a challenging dilemma as it needs to find the right balance between acting cautiously and not making drastic moves. If it remains at the current rate for too long, it could become excessively limiting. Therefore, we are expected to witness the initial rate cut taking place sooner rather than later.

The head of Foxtons, Guy Gittins, said that people who want to buy a house are hoping for a lower interest rate, but it looks like they will have to wait longer. This year, everyone thinks the rate will go down, but it hasn't happened yet. The good news is that since the rate has stayed the same since September, the property market in the UK has become more stable. This helped encourage more people to start trying to buy a house again.

It's safe to say that the market has significantly improved, with a 23% rise in sales inquiries compared to the previous year. Moreover, there has been a 19% increase in viewings and an announcement made on March 5, 2024, reported a 31% surge in the acceptance of offers.

The steep charges for taking out a loan are still a challenge for a lot of shoppers, but there are still plenty of chances for individuals who can obtain a home loan with assistance from a well-informed loan broker like Alexander Hall.

Jason Ferrando, who is the CEO of easyMoney, stated that even though inflation dropped unexpectedly this week, the Bank of England was expected to continue managing the economy gradually by keeping the base rate steady at 5.25% for the fifth time in a row.

The decision to not lower borrowing costs in 2024 may disappoint people hoping to buy a home, but it will make the property market more stable. Additionally, those trying to save money will have another opportunity for good returns.

According to Bradley Post, the managing director of RIFT, people all over the country will be happy to hear that inflation seems to be going down. This will mean that some things like household bills will be cheaper, which is good news. However, there are still many other things that people need to buy for their homes that are getting more expensive.

Therefore, it is improbable that their monetary stress will decrease soon and for those who have no other option but to take a loan to survive, the verdict to maintain the interest rates at the current level will not alleviate their financial burden.

The CEO of Zero Deposit, Sam Reynolds, stated that the decrease in rates was eagerly anticipated not only by homebuyers but also by landlords who were hoping for a boost in the property market. This could reinvigorate their interest in investing in buy-to-let properties.

Many people have been enduring the negative effects of costly variable interest rate products. To make matters worse, they may have only been able to pay the interest on their loan, leading to a significant increase in the overall cost of their mortgage compared to those who make complete monthly payments.

Since it's unlikely that the reduction of the capital gains tax will motivate investors as the government hoped, lowering the interest rate could have eased the burden on current buy-to-let investors. This, in turn, would have benefited renters.

Ed Phillips, the CEO of Lomond, expressed his thoughts and said: "For the homebuyers of our nation, the recent decisions by the Bank of England on interest rates have been a welcome change. We have experienced 14 base rate hikes since December 2021, so the lack of any recent news indicates positive developments."

However, it is understandable if they feel let down by the fact that there was no reduction seen today, especially after the inflation data revealed this week.

Although a freeze on interest rates has aided in steadying the market, numerous individuals still face difficulties due to the high cost of borrowing. Despite having a promising beginning to the year, a decrease in interest rates would greatly facilitate the flow of investments and lead to a hastened market acceleration.

Daniel Normal, the head of APRAO, stated that many people in the housing market were expecting interest rates to go down. However, he believes that the current interest rate freeze will actually benefit those who build houses in the country.

This will not just aid in stabilizing the housing market in terms of buyer demand, but will also result in more secure sources of funding for real estate development.

The consistency that lies ahead will provide developers with a stronger foundation to anticipate the upcoming year. This will enable them to have faith in their drive to increase the available supply in the market.

The head of Open Property Group, Jason Harris-Cohen, expressed his thoughts, saying: "Homebuyers have been met with twofold disappointment this month. The Spring Budget failed to offer anything exciting to boost sales, and now the possibility of a lowered interest rate has been crushed."

The inflation has been making progress in the correct direction and there are strong indications that the real estate sector is rebounding. Nonetheless, a reduction in the interest rate would have provided the necessary boost for it to really progress swiftly.

Marc von Grundherr, the Director of Benham and Reeves stated that while it's good to have certainty, people who want to buy houses urgently need some kind of relief. This is especially true for those wanting to buy in London, where both expensive property prices and high mortgage rates are making it tough for people to afford buying homes.

Today was the ultimate opportunity to provide some kind of economic boost to further enhance the increase in market activity during the spring season. Although we anticipate an increase in market activity, a lot of potential buyers may hold off on making any decisions until a reduction in interest rates actually happens.

Colby Short, who is the co-founder and CEO of GetAgent.co.uk, said that interest rates have peaked and can only go down from now on. This news will surely be welcomed by homebuyers all over the country, who have been waiting for this moment to arrive.

Regrettably, it seems that we will continue to stay in our current situation for a little while longer. While today's verdict won't initiate the market, it also won't impede the progress that has been happening in recent months.

The number of people buying homes has increased, with more offers being made and sales being finalized. This has led to an increase in house prices, as we head into the spring selling season - which is typically the busiest time for the UK property market - and we're already seeing the positive effects.

Daniel Austin, one of the people who started ASK Partners and is now the CEO, thinks that the economy will benefit from the drop in inflation that was mentioned yesterday. He also thinks that the Bank of England will keep interest rates the same, which is good news. The drop in inflation should continue over time, which is also helpful for the economy. Even though the economy is starting to improve, people who owe money will still feel some pressure.

When property loan extensions come to an end, borrowers will have to either invest more money, give back their belongings to the lenders, or sell them in a market that is not very active. This will cause new properties to enter the market and result in an increase in activity, giving a chance for buyers with enough money to buy assets at much lower prices than usual.

According to Katie Pender, who is in charge of Target, the Bank of England made an expected decision by keeping the bank rate at 5.25% for the fifth month in a row. This is because they are waiting for inflation to decrease. People who have borrowed money are hoping for a rate cut later this year. However, currently, mortgage rates are changing very quickly which is causing instability. There may be complications because of the upcoming General Election and potential changes to the government. Despite this, Target will continue to support lenders and borrowers by using the latest technology to make decisions quickly and improve customer satisfaction.

Jonathan Samuels, CEO of Octane Capital, shared his viewpoint that the Bank of England could have been more decisive in raising interest rates from the start. He believes that this could have helped to control the rise of inflation at an earlier stage, which has been a concern for many people, including himself.

However, we are beginning to notice a decrease in inflation. Although the fluctuation of swap rates is currently uncertain, there is a possibility that interest rates will decrease soon, giving hope to those looking to buy a home. This would stabilize the real estate market and eventually lead to a decrease in mortgage rates.

Laura Suter, who is in charge of handling personal finance at AJ Bell, states that although interest rates remain consistent for the next month, the rates of return for savers and mortgage holders have been fluctuating drastically. Savers have been experiencing varying rates of return for months while mortgage holders have been experiencing an unpredictable change in their rates.

Homeowners are feeling annoyed because even though the Base Rate is steady, mortgage rates are fluctuating unpredictably. This happens because mortgage rates are determined by guesses about interest rates, and we have no definite indication of when rates will indeed be lowered. In January of this year, mortgage rates fell drastically due to expectations of rate cuts that turned out to be too soon, and intensified competition within the mortgage industry. Nonetheless, rates have been rising again since then. Even though they haven't reached the high point they hit last September, there has still been a notable increase.

This suggests that people who secured a rate in January before their mortgage fix rate concluded this summer, are probably feeling quite pleased with themselves at the moment. The fluctuation of rates emphasizes the significance of being aware of when your fixed-rate mortgage ends and locking in a fresh deal six months prior to that time. If rates decrease over that period, you have the ability to switch to a more affordable deal, but you will still have the security of a locked-in insurance rate.

It can be very confusing for regular homeowners to figure out how to navigate the mortgage market, especially now. Many people are trying to decide between getting a fixed or a tracker mortgage, and if they do choose a fixed mortgage, they need to decide between a two-year or five-year option. These decisions can make it difficult for people to get a new mortgage quickly, but it's important not to procrastinate, because the consequences can be very costly. For instance, according to Moneyfacts, the typical Standard Variable Rate is currently 8.18%, which means that even just a few months on that rate could cause significant financial hardship for many households.

Karl Wilkinson, the Chief Executive Officer of Access Financial Services, expressed his views saying that the Bank of England's base rate of 5.25% hasn't decreased yet but he predicts that it may go down in the upcoming months, probably by summer.

The drop in inflation to 3.4% that occurred yesterday has already had a positive impact. It has led to a decrease in swap rates, which are now at their lowest point since September 2021. This gives lenders more flexibility to reduce their own interest rates. An example of this is NatWest, which has already made cuts to its remortgaging and tracker rates in the last day.

Overall, this is positive information for those who have taken out loans and are finding it challenging to keep up with the payments due to financial constraints.

Perenna's CEO, Arjan Verbeek, mentioned that even though the inflation rate decreased in February, customers still heavily rely on external factors. The mortgage market is continuously shaking due to the short-lived new mortgage deals, which usually last for only a few weeks1. Consequently, customers find themselves uncertain and in a state of flux. Despite the steady, high base rate, the mortgage market is turbulent.

People who rely on the usual mortgage products are always affected by things they cannot control. In order to see real improvements, politicians and the larger mortgage industry need to team up and work together towards a brighter future. By promoting the advantages of long-term fixed-rate mortgages, we can make a positive impact.

According to Aaron Milburn, who is the head of Pepper Advantage, a credit intelligence company in the UK, the Bank of England's decision to keep interest rates steady indicates that they are carefully analyzing the information available to them before deciding to decrease rates. The bank wants to make sure that all necessary preparations have been made before making any changes.

After a span of a year, important markers have finally started to point towards positivity in the central bank's chart. The recent dip in the inflation rate is a pleasant development, but there are other critical indicators displaying that families are experiencing less strain.

The amount of late mortgage payments in our portfolio has stopped increasing after going up consistently for a year. We have also noticed a decrease in direct debit rejections, which are a type of late payment that warns us early, after it consistently increased over the last 24 months.

Inflation has been decreasing, and it seems that the financial burden on households is no longer increasing. This gives the Bank of England the opportunity to think about lowering interest rates with confidence. This is good news for people who have loans as lower rates may happen soon. However, there is still work to do in order to keep the inflation rate consistently low and close to the central bank's goal of 2%.

Chris Little, the top revenue officer at Finova, expressed that the base rate has stayed at 5.25% for the past six months, indicating that the unpredictability of 2023 may be behind us. This could motivate lenders to provide better rates, which might benefit first-time homebuyers by giving them access to more affordable options. In addition, inflation is decreasing faster than anticipated, meaning that price increases may only be temporary, and rates may slowly decrease in the upcoming months.

Lately, it has become clear that quickly providing mortgage options is crucial in a constantly changing market. The average time to secure a mortgage has decreased to just 15 days. Therefore, it is essential for lenders to use the latest technology to provide personalized pricing, which allows borrowers to access the most affordable rates without endangering the lender. Although the pandemic has started a technological revolution, there is still room for improvement. The future of mortgage pricing lies in real-time adaptation to market trends, and investing in tech from the beginning is key to achieving this.

The person in charge of more2life, Ben Waugh, shares his thoughts on the current economic situation. He believes that keeping the base rate at 5.25% is a good thing, especially when we compare it to the conditions we had last year. This decision can help boost people's confidence in the market and decrease worries caused by the recession. Additionally, as inflation decreases, it may entice people to consider their options when it comes to mortgages as we approach Easter.

Although we welcome today's announcement, we have to acknowledge the fact that the increase in mortgage payments has become a reality. Interest rates have risen from their historically low levels, which have concealed the mismatch between modest increases in income and skyrocketing property prices. With payments increasing, borrowers are being forced to borrow even larger amounts in proportion to their income, and their ability to pay is being put under strain. These borrowers urgently require extensive discussions with advisers to explore the available options in the market, and to consider later life options sooner to guarantee a more financially secure future for themselves.

Mojo Mortgages representative Claire Flynn stated that it was expected that the Bank of England would decide to maintain the base rate at 5.25%. This decision has been made consistently for the fifth occasion, even though inflation has recently reduced to 3.4%, which is the lowest it has been in two and a half years.

Even though people who own mortgages or want to buy a house were optimistic that the decrease in inflation would result in a drop in the basic interest rate, lenders have been careful. At the start of the year, the market had average rates, but lately, it has been unstable with numerous mortgage lenders raising their rates.

It's tricky to anticipate how mortgage lenders will react to this announcement due to the instability involved. The desirable outcome would be for inflation and swap rates to decrease, which would lead to a more consistent housing market. Nonetheless, a lot of specialists believe that the base rate won't start to decline until August.

People who are on tracker mortgages can feel reassured that their interest rates will not go up for now. However, it's uncertain if those who have other types of variable rate mortgages will experience any advantages.

Since August 2023, the base rate has maintained at 5.25%, but the response of lenders has not always been as expected in the past. In recent weeks, the average interest rate for a two-year fixed mortgage (75% LTV) has increased. Some lenders have raised their rates, but there have also been some decreasing trends noted as well.

To make sure you get a great deal, it's a wise decision to talk with a mortgage broker if your current arrangement is coming to a close. It's been reported that mortgage rates are being removed within a day, which means it's important to secure a desirable offer rapidly.