The sun is out, swap rates are steady, and pricing is improving
The mortgage market is showing signs of picking up, with the arrival of spring, according to Nicholas Mendes (pictured), from prominent London broker John Charcol.
“There’s a note of optimism, but it’s definitely cautious,” Mendes told Mortgage Introducer. “That’s based on early signs we’re seeing: more mortgage enquiries coming through, returning clients and a general lift in buyer sentiment. It’s not a surge by any means, but there’s more movement now than there was towards the end of last year.
“Geopolitical tension – whether it’s US policy shifts, conflicts abroad, or global economic jitters – is always in the background. While swap rates and mortgage pricing have held steady recently, that stability can be fragile. Most borrowers are aware of that and tend to act more decisively when conditions feel settled. So, this current calm – while it lasts – is really valuable.”
Mendes notes small but steady improvements in mortgage pricing, along with more flexible deadlines, and points to the latest announcement from Halifax, with updates to the lenders’ mortgage range from today. It is extending completion deadlines across the board, which gives borrowers a bit more breathing room to get everything sorted, he observed.
“Lenders like Halifax making proactive changes – whether it’s extending deadlines or tweaking pricing – suggests they’re also expecting activity to ramp up,” Mendes said. “Overall, this feels like a positive step. While we’re not expecting any big surprises in the short term, the outlook is improving. There’s a growing sense that interest rates have peaked, and that’s encouraging for anyone thinking about locking in a mortgage deal. The signs are pointing toward a more stable and positive outlook.”
Mendes observes that there’s a blend of rate changes, with some fixed rates coming down by as much as 0.16%, while a few are going up slightly (up to 0.14%). “While that might sound a bit mixed, it reflects what’s happening in the wider market right now,” he said. “Lenders are carefully adjusting their pricing to stay competitive and manage demand. Behind the scenes, interest rate expectations are staying steady. Swap rates have been calm and consistent lately, with two-year rates at 3.93% and five-year rates at 3.97%. That stability is creating a bit of breathing space, and we’re starting to see more attractive fixed-rate deals, especially for people looking to remortgage.”
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Can the good weather boost mortgage business?
There’s also a factor that mortgage lenders and brokers have no control over – the weather. Britain is enjoying generally warmer, sunnier spring conditions, and that can be good for business. “The weather absolutely plays a part,” said Mendes. “Longer days, brighter light – it just makes people more active, both in listing and viewing homes. Properties tend to look their best, and we often see a noticeable uptick in buyer interest when the sun comes out. If this spring really is shaping up to be unusually warm, it could bring forward a lot of activity. Buyers often want to complete before the summer holidays, so a sunny spell now can extend the traditional viewing window and encourage people to get moving a bit earlier.”
To what extent does the market need a boost to fill the gap left following the rush to meet the April Stamp Duty deadline? “There’s a bit of a gap to fill, though not to the extent with the last Stamp Duty holiday,” reasoned Mendes. “Some buyers who might’ve moved in Q2 brought things forward to beat the deadline, so unless broader demand picks up, we could see a slight dip in momentum. That said, there’s still a lot of pent-up demand out there. Buyers – and those coming off fixed rates – are slowly adjusting to rates hovering around 4%, and lenders are responding with changes to affordability and criteria to support them.”
Finally, could all of this be dampened by any knock-on effect from Chancellor Rachel Reeves’ poorly received Spring Statement last week? We may not know for a while, Mendes suggests. “Any real impact will probably take a bit of time to come through,” he said. “The housing market tends to respond more to overall tone than the finer policy detail in the short term, so if the message is positive and forward-looking, that alone can help boost confidence quite quickly. But, for anything structural to filter down to buyers and borrowers, we’re likely talking months rather than weeks.”
