CEO shares his positivity, but what do others think?
The UK has seen one base rate cut by the Bank of England, with more anticipated before the year is out – and further cuts expected to follow in 2025. As competition heats up, lenders are busy dropping rates in the mortgage market.
Reasons to be cheerful? It certainly seems so, particularly if you ask Will Rice (pictured), the CEO of London-based fintech mortgage lender Gen H, who believes the market is in the best shape it’s been since the company opened for business in 2019.
“We launched Gen H at one of the worst times imaginable!” Rice told Mortgage Introducer. “For the first time since we started Gen H, the market outlook is unambiguously positive. We are in the first innings of an interest rate cutting cycle, which will drive steady growth in demand. The supply of properties for sale is now at very healthy levels, which should create a balanced market – something we haven’t seen in a long while.”
At Gen H, Rice is leading a team, with an overarching aim to broaden access to homeownership for aspiring first-time buyers, while also supporting others in the homebuying market, including those looking to remortgage.
“As an industry, we need to work out how to consolidate the fragmented homebuying process and make it easier for customers to achieve their goals,” said Rice. “Enabling customers to achieve their dream of homeownership is, without a doubt, the most rewarding aspect of working in this industry. While we’ve come a long way from the early days when I knew each of our customers by name, I still get to see the impact we are having.”
Certainly, Rice remains confident about where the market will be in 12 months’ time.
“I anticipate a healthy market and hope that this benign backdrop will create space for some longer-term thinking,” he suggested. “I strongly believe that the best thing a broker can do to grow their own business is to make sure they are across the detail of all the new affordability solutions that are available in market.
“Lenders are innovating across the industry, from Skipton’s Track Record mortgage to 5% deposit schemes to our income booster product. To maximise business over the next year, brokers need to stay abreast of these developments that allow them to convert more leads into new homeowners.”
How positive is the mortgage industry?
Some might dismiss Rice’s evaluation as a Pollyanna assessment of the market, but he isn’t a lone voice in feeling positive about business.
According to John Phillips, CEO of broker Just Mortgages and Spicerhaart estate agency, clients are responding well to the changes in the market and returned from their summer breaks with house moves on their minds.
“We are continuing to see activity across the market, with lenders in all sectors making reductions and criteria changes to encourage new business and increase market share,” Phillips shared. “The best brokers are already responding to this and are proactively positioning themselves to help clients navigate the market and seize opportunities.”
Mark Harris, one of the original founding team of Savills Private Finance, which later re-branded to SPF Private Clients, noted that lenders are responding positively as they hope to steal a march on their competitors.
“Mortgage rates continue to soften, with Santander introducing a sub-4% two-year fix on the back of the lowest two-year swap rates in two years,” commented SPF’s CEO. “There are also plenty of five-year fixes at sub-4% for those looking for certainty over a longer period.
“While rock-bottom rates have long gone, these reductions in mortgage rates are giving borrowers some comfort after a prolonged period of rising pricing. Competition between lenders is likely to mean further gentle reductions in mortgage rates as they vie for new business."
Read more: Has the UK mortgage market finally recovered from Liz Truss?
What impact will the Bank of England’s base rate decision have?
Jonn Fraser-Tucker, head of mortgages at online mortgage broker Mojo Mortgages believes last week’s decision by the Bank of England to hold the base rate won’t overshadow the positive developments currently benefiting mortgage borrowers.
“Fixed-rate mortgages have been steadily declining, reaching their lowest levels in two years,” he emphasised. “Last month, after the last base rate reduction, the average fixed rate was 4.8%, down from 5.9% in August 2023. This downward trend makes it an opportune time for borrowers to consider switching their mortgages rather than staying on their current deal, should they be able to.
“We’re seeing this attitude change reflected in remortgage activity, too. Last month, 47% of our remortgage customers switched lenders, up from 36% in July. This trend signals a shift in borrowers seeking better deals.
“For first-time buyers, the market is currently the best it’s been since the mini-budget of 2022. With the majority - 51%- of our home buyer customers in August being first-time buyers, it’s clear that many are taking advantage of the current mortgage market after two years of hesitation. There’s a growing eagerness among these buyers to get ahead of the curve, particularly if the upcoming autumn budget provides further support for first-time buyers.”
Tony Hall, head of business development at Saffron for Intermediaries, maintained a positive outlook.
“Many are predicting two more cuts before the end of year, and activity in the mortgage market is starting to ramp up as a result,” Hall observed. “Good levels of supply, with sales instructions up 7% in August compared to the 2017-19 average, points to greater levels of activity for the remainder of the year.
“While the October budget will help provide more clarity on longer-term expectations for the market, it is safe to say confidence in the market is increasing, and a busy autumn period will be supported by falling mortgage rates.”
