We’ve spoken to our in-house mortgage advisor, Clint Whitfield from Choice Mortgage Solutions, to get his expert view on the current situation.
There is a lot of negative press around mortgage rates, and we feel that it’s very difficult to distinguish the scaremongering from the truth. To gain some expert clarity, we’ve spoken to our in-house mortgage advisor, Clint Whitfield from Choice Mortgage Solutions, to get his view on the situation.
“The Bank of England base rate* has virtually no effect on what lenders offer on fixed-rate mortgages. These are dictated to by Swap Rates (a way of predicting whether rates will go up or down in the mortgage market)*. Before Liz Truss’ mini-budget, the Swap rate was 4.5%, and post Liz Truss this peaked at 6%. This was the point lenders substantially hiked their fixed-rate deals. My good news is the Swap rate now stands at 4.38%, which is slightly lower than pre Liz Truss and this means that fixed-rate mortgages should come down from their current high levels and one would hope by a noticeable amount.
We are already seeing some slight reductions, and more should filter through over the coming weeks. We then get to the New Year when lenders realise they all have new lending targets, and suddenly competition returns to the market. This should also provide some downward pressure on new rates.
From a mortgage point of view, the November 3rd 2022 Bank of England announcement is pretty irrelevant unless you have a variable/base rate tracker mortgage. A tracker may be worth considering at present (if this suits your financial situation) as there are some pretty reasonable rates out there!”
If you’d like to speak to Clint about your personal situation and find the best mortgage deal for you, you can call him on 07432136293.
*Bank of England base rate - Bank Rate determines the interest rate we pay to commercial banks that hold money with us. It influences the rates those banks charge people to borrow money or pay on their savings. (Bank of England)
*Swap rate - The swap rate is the fixed rate of a swap determined by the parties involved in the contract. The swap rate is demanded by a receiver (i.e., the party that receives the fixed rate) from a payer (i.e., the party that pays the fixed rate) to be compensated for the uncertainty regarding fluctuations in the floating rate utilized in a swap. (Corporate Finance Institute)