Mortgage Market Springs Into Action
28.04.25The mortgage market has seen more than a bit of activity over the past few weeks, much of it due to, and some of it in spite of, the general effects of Trump’s tariff announcements.
What is interesting is the view that, for the UK at least, this could work in favour of UK inflation, but not for the US. You can listen to the opinions of the expert Sunday Times Chief Economist David Smith in our latest Coreco Couch interview to find out more.
Initially, we observed a significant decline in SWAP rates, followed by a rebound after the announcement of a pause on tariffs, and then a more general easing. This serves as a reminder of just how volatile the markets can be. In such a fluid environment, many lenders initially adopted a cautious “wait and see” stance, mindful not only of current market shifts but also of protecting the large volume of cases still pending completion this year.
That said, it’s genuinely heartening to see a few of the big lenders once again offering two- and five-year fixed rates that begin with a “3”, a welcome sight as SWAP rates adjust in the wake of the ongoing turbulence triggered by global trade tensions. Danske Bank, available only through certain brokers like Coreco, even offers a 2-year fixed rate at 3.75% for properties with an EPC Rating of A, B, or C.
As SWAP rates appear to be settling at a lower level, major lenders such as HSBC, Nationwide, Barclays, Halifax, and Santander now all have rates below 4%.
However, while this is all promising, and rate cuts are looking more likely – and perhaps necessary – whether mortgage rates fall in lockstep remains to be seen, as much is priced in well in advance.
Once again, the property market is demonstrating its resilience despite the economic headwinds. The anticipated slowdown in post-stamp duty change might not materialise, especially with these new rate cuts filtering through.
Those trying to time the market may find it a fool’s errand in such a jittery landscape. Whilst saving some money on a mortgage is of course what we all want, with house prices not going anywhere but up, albeit slowly, and demand still high, we believe the best option for many is not to wait and risk missing out on the home of their dreams.
Inflation – Where are we now?
Inflation, at least, has provided a glimmer of hope. The headline rate dropped more sharply than expected last month, primarily due to declining fuel costs. According to the Office for National Statistics, the CPI rose 2.6% year-on-year in March, down from 2.8% in February, providing the Bank of England with fresh encouragement to consider a rate cut at its next meeting in May.
But let’s not break out the bunting just yet. The road to the Bank’s 2% target remains long and winding, with service inflation proving sticky, mainly due to rising housing-related costs, such as rent and council tax. April’s energy price cap rise is also expected to nudge inflation back up, if only temporarily.
That said, the price of oil has decreased substantially, and, as mentioned above, the trade wars could work in the UK’s favour in terms of inflation. It’s all to play for.
Affordability Easing
One aspect that is particularly relevant to homebuyers, and especially First-Time Buyers, is affordability. The good news here is that we have also seen several lenders now improving their affordability stress testing, after the pressure to do so from the Government, who want to see more activity and is keen for a robust and effective housing market and the economic benefits that more transactions bring.
Santander was the first to move, now joined by many others, with Halifax the latest. Quite simply, this means that clients can now borrow more than they could a few weeks ago.
Taken together with more innovation in the mortgage market, for First-Time Buyers, those who are self-employed, or buyers wanting to maximise their borrowing capacity with April Mortgages now offering up to 7 times income on their Long-Term fixed rate products, there is much more choice than there has been for many a year.
The green shoots of spring are filtering through to the mortgage market.
To speak with one of our friendly, professional advisors, please call us on 020 7220 5110 or click here.
2 responses to “Mortgage Market Springs Into Action”
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Written by Andrew Montlake
Andrew Montlake, better known as Monty, began his journey with an Hons degree in Economics & Politics before starting in the mortgage industry in February 1994. As a main founder of Coreco in 2009, he successfully grew the brand, marketing, and communications, and was made MD in 2019 focussing on the overall vision, strategy, and culture of the company. As Coreco’s media spokesperson, Andrew can often be seen or heard on TV and radio as well as regularly commenting in the national, local, and trade press. He is the author of this acclaimed Mortgage Blog and is well-known for his social media, podcasts, and public speaking. Andrew is now proud to serve as Chairman of the Association of Mortgage Intermediaries, (AMI) as a cheerleader for the Mortgage Industry as a whole and continues to work at the coal face, writing mortgage business and advising clients.
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I have a modest mortgage of £160K fixed to 9.27 at 5.84%. This is high!
I would like a new (lower!) mortgage on this property of £300K with which I could pay off another mortgage of £135K (at 6.39%)
Obviously all the associated costs, penalties etc all add up but I feel one mortgage is better than two at a new lower overall rate.
Is this worth looking into please?
These are London flats in the same building that I own (value £500K each) though I (and my wife) are residents in France!
Thanks
I prefer to speak when and if my suggestions look possible and worth taking further.
Thanks
GTB.