For instance, it will not have escaped your notice that the direction of travel when it comes to swap rates and Bank Base Rate (BBR) is north of where we were throughout 2021.
Indeed, when it comes to swaps, that upward pressure has been there for the last 12 months, but for a variety of reasons – not least, intense market competition. This has tended not to have a significant impact on product rates within the specialist lending space.
However, there has been a notable shift again particularly in recent weeks and advisers are likely to have seen lenders beginning to adjust their pricing accordingly in order to match the fact that swaps have increased.
There is already intense speculation that the MPC will raise rates again at next month’s meeting. As I write, the latest CPI inflation figures have been released showing that a rise to 5.5% in the 12 months to January, the highest it has been for the last 30 years.
That in itself puts further pressure on the Bank and the MPC, given that (as we know) its inflation target is 2% or below. It looks increasingly likely that further rate rises will be announced throughout this year, however the big question is whether it will have a traditional impact, i.e. bringing inflation down, given that it is believed global factors are more responsible for rising inflation rather than those within the UK.
It is, as always, something of a complicated picture and certainly a moveable feast, and advisers’ clients are likely to see headlines around rates and product pricing on the up and wonder what this might mean for them in terms of existing monthly payment or access to new mortgage finance.
The good news here is that rates are still historically low, and there is plenty of competition in the market to ensure that all types of borrower are able to get competitively-priced mortgages. They just might not be able to secure the type of rates that were available just four/five months ago.
That, in itself, tells us something. That this market can change relatively quickly and for a lender like Foundation, we are constantly reviewing what swap rates are doing and feeding it into our product pricing, while ensuring advisers have plenty of time to adapt to those changes.
Communication is (as always) key here and we will continue to ensure those channels are open and advisers have all the information they need to work effectively on behalf of their clients and secure the finances they need for them.
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