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"Should borrowers lock in now or play the waiting game?" Brokers share their views

ended 25. September 2024

This morning, Coventry, following the likes of TSB, NatWest and Nationwide earlier in the week, are the latest lender to announce residential fixed rate cuts. This despite the fact the Bank of England left rates on hold and inflation remaining sticky. While more monetary easing is expected in the months ahead, the Autumn Budget could deliver a curveball. With the caveat that all risk profiles and circumstances are different, Newspage asked brokers whether borrowers should wait for mortgage rates to potentially drop further or lock in now?

One, Rohit Kohli, director at The Mortgage Stop, said: “Rates have been reducing steadily over the past few months and it may be a great time for many to lock in a rate that they feel gives them an affordable monthly payment. Markets do not like surprises and with the Halloween Budget on the horizon, it may be a good opportunity to lock something in now just in case the reaction from this pushes rates back up again.”

Another Patricia McGirr, founder at Repossession Rescue Network, commented: "Rates ‘might’ go down again, but waiting could mean missing the chance for peace of mind. Trying to time the market is as risky as betting it all on black at roulette. It’s about protecting yourself and your home and that has to be based on borrowers' unique circumstances. Sometimes, security today is worth more than holding out for a better deal tomorrow."

A third, Mike Staton, Director at Staton Mortgages, added: “Whilst fixing in may seem tempting, there is a wave to be ridden that I feel will lead to lower rates. Trackers are still the go-to option for me but it is never one-size-fits-all in the mortgage industry.”

The views of eight brokers and an economist are below.

9 responses from the Newspage community

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Rohit Kohli
Director at The Mortgage Stop
Rates have been reducing steadily over the past few months and it may be a great time for many to lock in a rate that they feel gives them an affordable monthly payment. Markets do not like surprises and with the Halloween Budget on the horizon, it may be a good opportunity to lock something in now just in case the reaction from this pushes rates back up again.
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Mike Staton
Director at Staton Mortgages
Mortgages are the most widely accepted form of gambling in the UK at the moment. Whilst fixing in may seem tempting, there is a wave to be ridden that I feel will lead to lower rates. Trackers are still the go-to option for me but it is never one-size-fits-all in the mortgage industry. Whilst a lot of people thought they knew better than industry professionals and went and fixed in for five years because LinkedIn and TikTok self-proclaimed specialists forecast Ragnarok for the housing market, the real superheroes were the advisors recommending the flexible short-term options. I have seen a client make a rate reduction this week due to only fixing in for a short term deal, therefore I still feel these are the way to go. Lenders rarely offer cheaper longer term solutions unless it benefits them, so the public need to ask themselves why 5-year fixed rates are cheaper than 2-year rates at the moment? If they don't know the answer then they should speak to a qualified mortgage specialist.
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Michelle Lawson
Director at Lawson Financial
We have seen a surge of lenders recently in a battle to the bottom, which is giving borrowers hope. I think the trend will continue, however we are locking in rates now as they can still be changed if there are further reductions. I am cautious of what the autumn Budget will bring and how the markets will react given Labour’s dimishing popularity.
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Simon Bridgland
Director at Charwin Private Clients
Coventry throwing their hat into the rate-cutting ring could unnerve some, as they are quite likely to drop rates in a similar fashion to TSB, NatWest and Nationwide, but there is always the fear of a slight increase in rates more broadly given the amount of turbulence in the air. New governments, elections overseas, conflict around the world all has an impact on the financial strings which can be pulled in one direction or another. Consumers should do themselves a favour and step back from the noise. It's pointless pausing things, as securing a rate now is be better than waiting for higher rates to start appearing, but if a better deal comes along then especially in the early weeks of arranging the mortgage, a jump to a lower rate which could come along, is usually possible. Be flexible.
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Tony Castle
Managing Director at PFG Mortgages
Rates continue to tumble despite the base rate staying at 5%. Most lenders give great flexibility on changing rates even if you have applied for a specific rate but not completed on it, which in turn should give great confidence to secure deals whilst on this downward trend.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
As lenders continue their rate-cutting frenzy, the question is, "should borrowers lock in now or play the waiting game?" Despite the BoE’s decision to hold interest rates steady, lenders have already implemented a flurry of cuts. This is driven by providers relying on falling swap rates, which impact mortgage pricing more than the base rate. These are forward-looking; therefore, despite expectations of monetary easing on the horizon, many lenders have already factored this into their new rates. Consequently, while waiting for lower rates might seem tempting, even large cuts in the base rate are unlikely to translate to further significant mortgage rate decreases. Therefore, borrowers may find themselves in a sweet spot where competitive pressures drive lenders to offer more attractive rates in the hope of gaining market share, even with underlying economic uncertainty. For many, the dream of homeownership may finally transform from a distant mirage to a tangible reality.
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Craig Fish
Director at Lodestone Mortgages
There is never a guarantee that rate reductions will continue and as there are a variety of options available, all dependent on individual circumstances, borrowers should not gamble and wait to make decisions. As with all forms of gambling, the market always wins in the end. There is also a change to stamp duty early next year, so waiting for rates to drop could be costly as the stamp duty changes will have a much bigger impact for those purchasing.
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Elliott Culley
Director at Switch Mortgage Finance
Mortgage borrowers will always have a fear of missing out when it comes to getting the best rate. If rates are falling borrowers will always want to secure the best rate before their deal comes to an end. Rates are predicted to continue to fall, but there is always an uncertainty on this in times of economic instability. Mortgage borrowers need to balance the risk and reward of waiting and I would always recommend locking something in as you can always change it if things improve before your current deal comes to an end.
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Patricia McGirr
Founder at Repossession Rescue Network
Coventry’s rate cuts may seem like a welcome relief, but for many people already feeling the pinch, banking on further drops could be risky. Locking in a mortgage rate now might give much-needed stability. Rates ‘might’ go down again, but waiting could mean missing the chance for peace of mind. Trying to time the market is as risky as betting it all on black at roulette. It’s about protecting yourself and your home and that has to be based on borrowers' unique circumstances. Sometimes, security today is worth more than holding out for a better deal tomorrow.