The Mortgage Market: Navigating Tough Mortgage Rates

The rise of interest rates, the price of mortgages and the cost-of-living crisis are causing ripples through the country. No doubt this is absolutely based on facts as household income is further diluted by various aspects of their lives and the rising costs around them.

Mortgage rates have scared everyone, and suddenly the thought of moving and purchasing a new home appears at first glance, impossible. Or, for current homeowners, the daunting thought that your current rate is coming to an end, and any new rate seems entirely unrealistic and unsustainable.

Of course, everyone is in different circumstances, and the cynicism across the market is that the cause and effect of any change to interest rates or government policy, affects the wrong people unfairly. Either way, that is not for me or us at The Mortgage Broker, to decipher. What we can say though, is that everyone deserves to be able to make an informed decision with the right support mechanism in place, whether a vulnerable customer or an established property professional. Now more than ever, individuals are seeking independent advice around their financial decisions, and it is imperative to achieving the best possible goal or suitable outcome. According to IMLA (The Intermediary Lender Association), 84% of lender products are sold to consumers through intermediary business such as mortgage brokers.

Not only are more products available via a broker rather than direct to your bank or lender, but it is also becoming more and more apparent, that everyone needs someone they can trust, to get independent advice, and help understand their specific circumstances. If you are a homeowner, it is imperative to speak to an adviser, and ensure you are on the most affordable and cost-effective mortgage product – especially if your fixed term is coming to an end any time in the next 12 months.

The Financial Conduct Authority estimated that 21% of UK Households are on a variable mortgage, and it is very important that if you are, you seek advice and get the right mortgage product to stop your costs increasing more than they need to.

If you are looking to purchase a home, ensure you get independent mortgage advice from specialists whom can support the purchase at the lowest rate possible, whilst also budgeting for adequate protection. It is always worth seeking out your own mortgage broker to search the market, even if as a backup to any mortgage rate that your current lender may offer. This happens every day, with one leading mortgage industry platform stating that in June, they had their second ever highest amount of mortgage products being searched for. First Time buyers are unfortunately facing higher rates than what has been available. However, whilst the days of very low interest rate mortgages are behind us, there are cost effective ways to get a mortgage, with the right advice and it is really important to understand that we are in a time of a new normal.

Whether employed or self-employed. Mortgage Brokers can search the market, and will always stress test the affordability to ensure the product is suitable, sustainable and affordable.

To support the trusted service that mortgage advisers deliver, the Financial Conduct Authority has introduced the Consumer Duty, to ensure firms are putting customers in a position to make an informed decision. This helps make sure that services such as ours at The Mortgage Broker, are always focused on delivering the most suitable advice and products.

Consumer Duty Pyramid

It is certainly worth searching for regulated advisers, with a credible and trusted service, to ensure you are getting the advice you need. The role of the broker is to understand the specific area of the market for you, access solutions that may not be accessible on the high street and help you achieve your goals. Whether Buy-to-Let, First Time Buyers, Remortgages, New Build and so on… there are vast changes happening in this unpredictable market, and it is best to be speaking to advisers who have direct experience within the mortgage area you are looking in. This applies to anyone with complex credit or debt concerns, through to portfolio landlords, company directors or higher net worth projects.

Furthermore, Consumer duty not only reinforces the service that should be delivered, but the value of such a service. Fair value is represented by the amount paid for the product or service and this being reasonably relative to the overall benefits of the product. There is a debate around fees that customers should or shouldn’t pay for mortgage advice. For me, the stance is clear. Everyone deserves advice for their unique circumstances, from advisers who know the market and will provide focus that can ultimately deliver what you need– like anything in life, it is worth paying for. There are free advice services of course, and likewise at the Mortgage Broker, we offer free mortgage consultations, free searches, and free comparisons – no problem. However, with specialists across the market, and our absolute customer centric focus, we make sure no stone is left unturned and we charge a very fair and transparent fee for processing mortgage applications depending on the requirements. Only where there is a successful mortgage application does this happen though.

Ultimately, the decision is for the customer to decide on their best path. However, even running a mortgage business, I still require advice and direction. The market is changing every day, but there are plenty of smart ways to navigate this. So don’t feel alone, there are many good advisers across our industry that now more than ever, have the consumer at the forefront of their service.

Over 1.4 million households are going to be reaching the end of their mortgage fixed rate between now and the end of 2024. If you are one of them, it is worth speaking to an independent mortgage advisor. Equally, you can click here and listen to our podcasts on navigating the current mortgage market.

Published on 25 October 2023

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