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Could FTBs lose out if banks batten down hatches?

ended 09. April 2025

Mortgage rates are finally following swap rates down, which is being welcomed by brokers and borrowers alike. However, with markets in serious turmoil and no end in sight to the trade war as China hits the US with another 50% on US imports, is there a risk that lenders might batten down the hatches if market conditions deteriorate further? Only this morning, the Bank of England warned that: "As the UK is an open economy with a large financial sector, global risks are particularly relevant to UK financial stability.” Is 2025 starting to resemble 2008 all over again, or are we a long way off that? And if banks do get genuinely nervous given the global recalibration that appears to be unfolding, will FTBs and those borrowing at higher LTVs be the first to feel it?

3 responses from the Newspage community

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Editor
Tony Redondo
Founder at Cosmos Currency Exchange
Better late than never, mortgage rates have dipped with swap rates. Brokers and borrowers are cheering, but the trade war’s escalation—China’s fresh 50% tariffs on US imports today, piled on Trump’s 54% on China—has markets reeling. The FTSE 100 is down 6% this morning and the S&P 500 has lost $5 trillion since 30 March. The Bank of England is right to point out that the UK’s open economy and bloated financial sector are prime targets for global shocks. Lenders might indeed batten down the hatches if this gets uglier but it’s not 2008 yet. Today’s turmoil is trade-driven, not a credit crisis. Banks are better capitalized—Tier 1 ratios are 15% vs. 7% pre-2008—and the BoE’s stress tests show resilience. But the vibe’s familiar: uncertainty’s spiking and if trade wars tank growth confidence could vanish fast. As always, first-Time Buyers (FTBs) and High LTVs are on the front line of risk. If lenders get spooked, they’ll tighten credit first where risk’s highest.
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Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
While it’s great to see mortgage rates finally easing in line with falling swap rates, the growing global instability is a concern. With the trade war escalating and market volatility increasing, lenders may become more cautious, particularly around higher LTV lending. First-time buyers, who typically borrow at higher LTVs, could be most exposed if lenders tighten criteria. We’re not in 2008 territory yet, as banks are far better capitalised and lending is more responsible, but if financial markets continue to deteriorate, risk appetite could shrink. The key for now is watching how sustained the volatility is before drawing big parallels.
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Harry Goodliffe
Director at HTG Mortgages
If banks get spooked, it’s first-time buyers who’ll be left out in the cold. We’re finally seeing rates edge down, but with global markets in meltdown and more trade war drama unfolding, there’s a real risk lenders start playing it safe. And when that happens, it’s usually the higher LTV borrowers who get hit first. These are the people who already have the odds stacked against them — shutting them out now would be a big step backwards. Let’s just hope lenders keep their nerve and don’t slam the door on those trying hardest to get on the ladder.