'We need to stay the course', says mortgage MD
Inflation officially climbed in the month of October, surpassing the Bank of England’s target of 2% and landing at 2.3% - something which is expected to have an impact on the cost-of-living. The figure marks an increase from just 1.7% in September, showcasing the sharpest month-on-month rise for two years.
As a result, mortgages are expected to suffer once again, with rates expected to stay higher for longer. But how exactly will this news impact brokers and their clients? Is it a case of sell up quick, or ‘keep calm and carry on’?
Speaking to Mortgage Introducer, Ceri Evans, managing director at Remoo Mortgages, said that it’s about taking a long-range approach to how this will ultimately impact the market, rather than focusing in on the upcoming weeks.
“I think we need to take the long view. We're still dealing with a relatively new government and a brand new Budget - as well as a first Labour Budget for 14 years. We've got to give that time to bed in and see what the outcome of that is, not just [have an] immediate reaction to what we've potentially seen in terms of inflation.”
For Samantha Lindsay, mortgage planning adviser at My Mortgage Angel, she believes this was expected – but nonetheless poses challenges for brokers looking to advise and help their clientele.
“This increase in inflation is in line with what was expected this month by the MPC,” Lindsay told Mortgage Introducer. “It has already been factored into their thinking when they made the base rate reduction earlier this month. Fixed rate mortgages are not directly impacted by any change in the base rate, however when your fixed rate mortgage ends then the options available may well be higher than you have been enjoying.
“With many lenders increasing their fixed rates seemingly weekly, our challenge as a mortgage broker is to act as quickly as possible for our clients. The faster we secure a rate for them the better as we can track the rates – if they go down then we are often able to secure the lower rates for the client before they exchange contracts.”
While hopes remained high in the sector for a pre-Christmas rate cut, the reality has hit differently. For Evans, however, she preaches patience – and reminds clients and brokers to look to the recent past for reassurance.
“I think we've got to remember that, two years ago, we had a disastrous mini Budget that effectively put us in the position we are now,” she told Mortgage Introducer. “It's taken us this long to recover from it. [I would] probably say that Labour have done the right thing in terms of clearing the decks to try and give themselves a better opportunity, a level playing field, in order to fix some of the issues that we're experiencing now.”
Evans added that while it’s disappointing that inflation has popped above the 2% target, it's not the end of the world given what we've experienced for the past two years.
“It's a time where we need to stay the course,” Evans said.
