Demand is strong - and listening to clients is key for brokers
Buying a property is always considered one of the bigger decisions that we make, not least because of the large sums involved – and, arguably, the confidence of buyers to take a leap of faith and purchase a new home has been dented a little in recent years.
Prime residential lender MPowered Mortgages certainly thinks so, but it identifies a new assuredness that’s emerging in the market as we gallop towards 2025.
Its head of product, Peter Stimson (pictured), believes that property buyers have effectively been treading water recently, waiting for their moment to strike.
“There is definitely a huge amount of demand from buyers out there,” Stimson told Mortgage Introducer. “People have been holding off buying for a number of reasons including falling house prices, interest rates and lack of available supply. All of these things are now changing or have changed. Confidence is a huge factor in the buying decision and we feel that is coming back to the market.
“There are some encouraging signs of an increase in activity, with more properties coming on to the market and more buyers out there. The ending of Stamp Duty relief on properties up to £425,000, as of 1st April 2025, may well see a pick-up in activity at the start of 2025 particularly for FTBs, although affordability still remains an issue for many.”
This renewed confidence can perhaps be attributed to the resolution of two key political events – the UK and US elections – plus the Budget finally being revealed (for good or ill). People like certainty, it seems.
“I think, if nothing else, we can perhaps now see a clearer shape and direction to where rates are heading over the next 12 months,” Stimson said. “Increased government borrowing plus greater inflationary pressures are pushing the swap curves up, meaning the markets are now forecasting a Bank base rate just over 4% in a year’s time. This, however, needs to be viewed in a realistic historical context rather than off the back of 10+ years of incredibly low interest rates.”
Read more: IMLA: Intermediary confidence in mortgage market remains steady
When does the Monetary Policy Committee next meet?
With the Bank of England’s Monetary Policy Committee due to meet again on December 19 to determine any changes to the base rate, Stimson clearly doesn’t envy the task before its Governor.
“Andrew Bailey is in a very difficult position currently where monetary and fiscal policy are in effect working against each other,” he reasoned. “As the Bank is responsible for inflation, as much as he may wish to lower interest rates at the moment, the government's fiscal policy announced at the Budget, in effect is likely to increase both GDP and inflation. At the moment, therefore, a watch and wait approach with regards to the key numbers of CPI, GDP and unemployment, sounds sensible.”
After a brief respite in which mortgage rates began tumbling down, the market has seen some hasty repricing upwards over recent weeks, with little discernible pattern in the way that lenders have responded – rates have gone up and down simultaneously, across the board.
A technology-driven business, MPowered keeps a close eye on market movements, of course, using artificial intelligence, automation and data modelling to refresh its offering as required. It reduced its Standard Variable Rate by 0.75% following the last Bank base rate reduction earlier this month, saying it was keen to pass on the full amount of the decrease, plus an additional 0.50% cut, to fully support borrowers in the market.
“We monitor and update what the competition are doing daily and have a pretty complex model that runs multiple simulations based on LTV and loan size for each product,” Stimson explained. “This allows us to price point where we want to/can in different areas.”
Stimson has some sympathy for the way mortgage advisers have had to navigate an unpredictable course through a sometimes choppy market, and are still doing so, but he believes a client focus remains key.
“I feel for brokers in what has been an incredibly turbulent couple of years,” Stimson shared. “Listen to your clients and don’t assume around rates would be my best advice. Most things we thought would happen in the last two years, haven’t!”
