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Mortgage rate war boosting demand?

ended 11. January 2024

A journalist at The Independent is writing a piece on mortgages to be published today focusing on the fact that most of Britain's biggest lenders have been cutting rates to below 4% for some products (mostly five-year fixes). He'd like some comment from brokers on whether the current rate war is seeing an upturn in business and property market transactions? In short, are rate cuts triggering real-world action and to what extent? A material uplift in demand or perhaps it's slowly creeping back? Any thoughts, whizz them across ASAP.

18 responses from the Newspage community

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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
The PR from lenders is working. News of rate cuts is certainly being noticed by clients as we've been getting serveral calls each day from people who've seen/heard of xxx lender dropping their rates and wanting to know more.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The current repricing strategy of the main High Street lenders is a welcome relief for borrowers. It will come as a comfort to those coming off a fixed rate and having to remortgage. However, in practice, it is not driving people into the market. The world has got problems that outweigh the current higher-priced mortgages. Inflation, global instability, an uninspiring government and nervousness for the economy feed through to a lack of confidence in the country. I can't see a major untick in the property market until after the general election when the country has a structured plan for housing and the wider economy.
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Darryl Dhoffer
Founder at The Mortgage Geezer
The elusive mortgage lenders, once Titans of stoicism, have engaged now in a price war, slashing rates below 4%. But are these siren songs triggering a stampede of homebuyers? - it might be too early for that just yet! Consumers are still interested in seeing how far the low-interest buffet extends, with some dipping their toes into the market and making tentative enquiries. The market is creeping back to life, with a slow uptick in activity for sure - long may this continue.
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Jack Tutton
Director at SJ Mortgages
Rates beginning with a 3 or 4 will encourage more people to start looking at moving again or getting onto the property ladder, rates at these levels seem to be more palatable than the levels we have seen. However, all the time there is significant talk of rates reducing further, and it is likely to make people wait longer to see what happens. I expect there to be a more gradual increase in the market rather than a large surge.
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Michelle Lawson
Director at Lawson Financial
New year, new low rates, new lender targets will hopefully lead to new highs in business. We are seeing people start to engage more but it is still early days in the first month. It will definitely boost consumer confidence and give them more of a reason to act now rather than a necessity.
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Harps Garcha
Director at Brooklyns Financial
The re-mortgage market has been the main target of the recent mortgage rate cuts. However, this could also have a positive effect on consumer confidence and market activity.

The impact of the rate cuts on the purchase market is still unclear. We have seen more enquiries from First Time Buyers, but we don't know how many of them will turn into actual applications.

If the rate cuts continue, they could further boost confidence in the market.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
January has been a strong start to the year and there is no doubt news of the rate war between lenders is filtering through, and stimulating activity. Home buyers are now faced with more favourable conditions than in 2023, with rates dropping and a property market that hasn't yet kicked into action. This window of opportunity may be short though as increased demand and cheaper mortgages will push property prices in an upward direction. Anyone remortgaging will be subject to market conditions at the time and will take whichever rates are available rather than their lender's variable rate. With rates dropping though, there will be a return of home improvers and capital raisers, who will find the current market far more palatable than last year, taking the opportunity to advance their plans.
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Simon Bridgland
Director at Charwin Private Clients
People are often a little slow to react to changes in interest rates, so the recent drops in rates are not yet causing an influx of ready, willing and able applicants just yet. You also have to consider that the increase we are seeing in enquiries is just the normal January good intention which folk have at this time of year. The drop however has made those potential applicants who were previously sitting on the fence decide to now take the plunge and get things agreed. Many are still hiding behind the parapet waiting for the rates to drop further, a little scared that they are going to lock something in too soon. If you deal with a good broker and you have time before you need to exchange or complete, they will keep your rate updated to the best available deals. If going direct with a lender, it simply doesn't happen.
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Elliott Culley
Director at Switch Mortgage Finance
There has certainly been an increase in activity since December last year. It is no coincidence that the positive outlook for the mortgage market and the subsequent rate reductions have contributed to renewed optimism for potential buyers. Confidence in the market is key, and right now there is a lot of positivity around the housing market. If rates continue to fall then further increases in activity are extremely likely.
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Paul Holland
Mortgage Broker at Henchurch Lane Financial Services
As a business, we've seen a huge uptick in enquiries from the start of the year! We're having to go back and review submitted business that is yet to complete as there is now access to much lower rates for our clients. Some of these amendments have saved thousands in repayments over the fixed term.
First-time buyers are coming out of the woodwork as well as home movers and property investors. A stark difference to the final quarter of 2023! The property market has proven somewhat more resilient than most predicted!
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Kylie-Ann Gatecliffe
Director at KAG Financial
New Year New Mortgage is definitely the trend we are seeing. From the minute we returned to the office in January we have had an influx of enquiries from customers either wanting to make a property move or look at their remortgage. Now rates are starting to come down and look more favourable this has boosted confidence for customers to move forward. With rates still falling this will hopefully keep the momentum building and get the property market back on track.
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Graham Cox
Director at Bridging Hub
Mortgage demand is improving quite quickly. Just a few months ago it was the slowest I'd ever known it, but confidence is returning and buyers are being tempted back. There's still some caution due to the precarious economic outlook, and an expectation that house prices may fall a little further this year. But I expect it to get very busy in the Spring, particularly if we get a base rate cut in May.
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James Miles
Director - Mortgage Adviser at The Mortgage Quarter
The new year demand has shot out the traps with many borrowers who wanted to move last year now pressing the button. Enquiries are up 120% in our office compared to January last year and many clients looking at ways of increasing their affordability to find their dream home. First Time Buyers and proving the most active as they are encouraged by rate drops as mortgage payments become more favourable again compared to rental.
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Richard Campo
Founder at Rose Capital Partners
Persevely, lenders cutting rates can cause procrastination if people are looking to move.
Indeed, that is why the Bank of England targets inflation at 2% as if something is more expensive tomorrow than today, you buy now. If the reverse is true human nature is to wait until costs 'bottom out'.
So oddly, while most of the economy is suffering the impacts of inflation, the property market is experiencing deflationary pressure both in terms of house prices and mortgage costs. In the longer term, and maybe as soon as the spring/summer, that will level out and I expect transactions to markedly pick up at that point, but as the property market mirrors the current weather, I am not expecting things to thaw out for a few months yet, but the outlook is very bright when you factor in lower property and finance costs. It will make future property purchases more affordable before the long-term trend of house price growth above inflation kicks in. So in short, smart people will be buying now!
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Steven Hargreaves
Mortgage and Protection Adviser at The Mortgage Co
Enquiries have increased 10-fold this year, and the reduction in Fixed-rate mortgages seems to be what has been firing this up.
The largest increase in enquiries for us has been First Time Buyers which is encouraging, as they have been very quiet in the last 6 months of 2023.
We have also been encouraged by the number of Buy-to-Let enquiries which have been very quiet in 2023, this is both from existing Buy-to-Let landlords that have remained predominately dormant for the last 18 months and new Buy-to_let landlords dipping their toe in the water.
Let's remain optimistic and hope the Fixed Rate war continues, it bodes well for 2024
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Gary Bush
Financial Adviser at MortgageShop.com
UK lenders having started a 5-year fixed rate mortgage war in the 3% arena is fuelling a great start to 2024 - with buyers, and home improvers out in force with new applications. The market has settled back from the panicking of late 2022 finally and the big corporate lenders have certainly set an agenda to gain market share as soon as possible - to make up for last year's losses in trade. We see this year as being busy and with Bank of England base rate decrease coming as soon as March potentially - driven of course by a further drop in the inflation figure.
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James Bull
Mortgage Broker at JB Mortgages
It is too early to say for sure what impact the recent mortgage rate cuts will have on the property market. However, since the turn of the year, there has certainly been a marked increase in the number of enquiries we have been receiving as a mortgage brokerage. Usually, when this happens it is a good sign that the following few months are going to be busy. Let's hope so !
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Peter Stokes
Director of Mortgages at Davidson Deem
The recent rate cutting is certainly bringing the thoughts of moving to the fore for more clients and we are seeing a moderate increase in the number of first-time buyer and home mover enquiries. However, it is not just about buyers, it is also about sellers, and the stock of properties put up for sale has to increase. Springtime is a traditional time for this to happen, so I feel these 'rate wars' are heating things up for a potentially very busy Spring period.