Brokers give their views on lenders cutting rates
August is traditionally a tumbleweed month, with little activity across the housing market as many are preoccupied during the school holidays, before their peace and quiet returns in September.
Despite this, Rhys Schofield, brand director at Peak Mortgages and Protection, said August has been unusually busy this time around, with lots of enquiries as the narrative has shifted to one of rates getting a bit more palatable, rather than an ‘impending apocalypse’.
However, while the recent rate cuts from lenders have created an air of positivity around the housing market, a number of brokers have warned the reductions are not all that they are being made out to be.
Overreaction to rate cuts
Mike Staton, director at Staton Mortgages, said it was inevitable that lenders were going to start reducing rates, however he believes the term ‘slashing’, which has been used far and wide, is too extreme for the reductions seen.
“Rates had been hiked up in a panic, which was caused by the government and the Bank of England being so secretive about their intentions; they would not have looked out of place in a James Bond movie,” Staton said. “One would think the government and central bank are trying to control the population with fear by keeping everybody in the dark so often.”
Kirsty Wells (pictured left), director at Blueprint Mortgages & Protection, agreed with Staton that the rate reductions have not been extreme enough so far.
“For many lenders, the rates on offer are still higher than just a few weeks ago, and, in comparison, some lenders’ rates are nearly 2% higher than they were two to three months ago,” she added.
Gareth Davies, director at South Coast Mortgage Services, said he is all for rates coming down, but, as of yet, he believes the reductions are not nearly at the level needed to make much of a difference. He believes more needs to be done regarding declining rates before the market can really start getting excited.
Marginal drop
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management, said while rates coming down is always good news, it is important to remember that they have only dropped from ‘very high to still quite high’.
“In reality, these rates are at, or around, the levels we saw before the financial crisis in 2008; so the real question is not when will they return to normal but is this a return to normal,” Taylor-Barr said.
Elliott Culley (pictured right), director at Switch Mortgage Finance, agreed that mortgage rates are coming down far slower than they went up.
“The swaps market is slowly reducing but the whole situation is quite volatile; anyone who can remortgage right now, I am advising to secure a rate and take advantage of rates reducing,” he said.
Culley added, however, that business will not fully pick up until rates stoop below 5%, so he is expecting reduced activity for the time being.
Do you believe the market has overreacted to lenders cutting rates in recent weeks? Let us know in the comment section below.
