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Mortgage rate rises ‘are definitely making more buyers think twice’

by Seamus Doherty Property Reporter
27th Feb 24 3:44 pm

More and more banks and building society’s with the exception of Halifax are putting up their mortgage rates.

The swap rates that dictate how much it will cost a lender to borrow money for a mortgage has risen.

Market expectations for the Bank of England to cut the base rate down from 5.25% has now been put back until either May or June.

Newspage asked brokers if the rate rises of recent weeks have impacted demand and one expert warned that “mortgage rate rises are definitely making more buyers think twice.”

Darryl Dhoffer, advisor at The Mortgage Expert said, “Borrowers in the mortgage pool are being bounced around by lenders constantly turning on the wave machine.

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“On an almost daily basis, mortgage rates are going up and then down. Lenders turning on the wave machine is causing major uncertainty among borrowers, which is not what we wanted after a strong start to the year.”

Justin Moy, managing director at EHF Mortgages said, “Mortgage rate rises are definitely making more buyers think twice.

“However, as long as rates don’t tip into the 5% range for standard mortgage deals, we might just come out of this by the skin of our teeth.

“Pent-up demand from those who abstained from moving in 2023 is helping, as are relatively lower house prices, which many see as a good opportunity.

“However, the relatively short supply of property is keeping the market buoyant and panicking buyers suffering from FOMO, (Fear of Missing Out.)”

Ben Perks, managing director at Orchard Financial Services said, “In our experience, demand from purchasers always drops off while rates are so unpredictable.

“As a result, the property market is slower and there is definitely a sense that buyers are waiting it out to see what happens.

“This is why we need the government or the Monetary Policy Committee to stimulate the industry through rate cuts, schemes or lower rates. The Spring Budget next week is a big opportunity.

“On the flip side, there is a lot more urgency from remortgage clients. Many home owners have kept an eye on rates over the past 12 months and are very wary of another spike up to the 6% products we saw after the mini-Budget.

“So there is little hanging around and borrowers are securing their rates early.”

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