"Most people wrongly assume that the Bank of England base rate will immediately have an impact on fixed rate products"
According to Edinburgh News, as of 2022, the average house price for first-time buyers in Edinburgh was approximately £240,000, equating to nearly six times the average local salary of around £41,000. Despite this, Edinburgh is something of a first-time buyer hotspot, with 63% of inquiries for new-build properties in the city from first-time buyers, up from 58% in the same period in 2023.
Jimmy Ireland (pictured), a seasoned mortgage broker, doesn’t mince words when discussing the current landscape for prospective homeowners in the UK, particularly in Edinburgh and the South of England. With mortgage markets still reeling from fluctuating interest rates and rising house prices, the challenges for buyers are stark.
Why? The relationship between the Bank of England's base rate adjustments and mortgage products is widely misunderstood.
“Most people wrongly assume that the Bank of England base rate will immediately have an impact on fixed rate products,” he explained. The reality is far more complex. Fixed-rate mortgages, which dominate client preferences, are influenced by broader market conditions rather than short-term base rate changes.
“Lenders anticipate in advance what they think the base rate is going to do based on market conditions, swaps, and money markets. They’ve already priced themselves into that market,” Ireland added.
For borrowers, this lag between rate announcements and product adjustments can lead to frustration. Ireland regularly fields calls from clients who see news of base rate reductions and expect immediate benefits.
“I go to great lengths to explain to my clients that whatever we do is just a snapshot in time. If a better rate comes along, we’ll secure you the lower rate,” he said. However, the broader economic pressures, such as inflation and the swaps market dynamics, often counteract any downward rate trends. For many, the promised relief feels elusive.
With the average house price in Edinburgh reaching £339,000, affordability is a glaring issue, particularly for first-time buyers. Traditional pathways like the Scottish First Home Fund and mortgage guarantee schemes offer some relief but are largely insufficient. Ireland points out the sobering math: “The average salary in Scotland is about £34,500. Most lenders will do an income multiple of four and a half times that, which gives about £157,000—not even half of what’s needed for an average property in Edinburgh.”
The reality for many is a growing reliance on the so-called “Bank of Mum and Dad”. Parental support, often through releasing equity from their own properties, has become a critical factor in enabling younger buyers to secure the necessary deposits.
“I spend a lot of my time releasing equity for parents to support their children,” Ireland added. Without such interventions, many are left facing a housing market that feels increasingly out of reach.
Self-employed applicants face their own set of hurdles, especially with tightened requirements for up-to-date tax documentation. Ireland stresses the importance of early tax submissions and strategic planning to optimise borrowing capacity. “If their average isn’t looking very good over the last two years, we’ll look at the most recent returns and see if an earlier submission could improve the average,” he explained.
However, the challenges extend beyond tax records.
“Many self-employed people retain profits within their business to reduce tax liabilities, but that can create issues when trying to show sufficient income on paper,” Ireland added.
And, as online mortgage platforms gain traction, Ireland underscores the enduring importance of personalised service. He explained to Mortgage Introducer the pitfalls of algorithm-driven advice that often overlooks individual client needs.
“Online platforms give you the best headline rate irrespective of whether it’s applicable to your needs,” he warned. By contrast, his hands-on approach involves guiding clients through every step, ensuring decisions are both informed and tailored.
“I work for you, not the lenders,” Ireland added, a mantra that resonates strongly in an era of impersonal, automated service.
This personalised guidance proves invaluable in a market rife with uncertainty. From navigating volatile interest rates to understanding complex financial products, Ireland’s expertise offers a stabilising force for clients overwhelmed by the process.
“Buying a house is tricky,” he added. “But having someone who’s got your back makes a world of difference.”
