MORTGAGE brokers have urged borrowers to “buckle up” for “a massive week for mortgages”, with unemployment and wage growth data out tomorrow and inflation figures due Wednesday. They warn both data sets could have a material impact on the direction of mortgage rates in the latter half of the week and during the rest of the month.
Last week, the Nationwide cut mortgage rates by up to 0.2%, hitting the symbolic 3.5% milestone. But if inflation or wage growth prove sticky, the rate cuts of recent weeks could come to a grinding halt, brokers have cautioned.
Omer Mehmet, Managing Director at Welling-based Trinity Finance, urged borrowers to buckle up.
He said: “Two big sets of economic data, specifically wage growth and unemployment tomorrow, and inflation on Wednesday, could see a lot of activity in the mortgage market in the latter stages of the week — for better or for worse.
“Lenders will be keeping a close eye on both sets of figures and the outcome could be a reversal in recent rate drops or a full-blown rate war. Buckle up.”
“A big week for mortgages”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, agreed: “Wage growth and inflation data being published on Tuesday and Wednesday could send mortgage rates in either direction later this week.
“If both play ball and continue to edge down, rates could drop further, but if they nudge up, rates could head north again. It’s a massive week for mortgages.”
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, said rates could go sub-3.5% if both sets of data move in the right direction.
He added: “Expect a “game of two halves” this week. Nationwide’s 3.50% cut last week threw down the gauntlet, but rival lenders will likely sit tight until the economic data drops. Tuesday’s wage figures and Wednesday’s inflation data are critical.
“If the data cools, Swap rates, which determine the pricing of fixed rate mortgages, could fall and we could see aggressive cuts — potentially sub-3.50% — from the big lenders.
“On the other hand, if the wage and inflation data heats up, lenders will pause or potentially pull best-buy deals. The real action happens late in the week.”
Downward momentum
Jonathan Alvarez Herrera, Mortgage Consultant at Ringwood-based Ayla Mortgages, said there is clear downward momentum in mortgage pricing currently as competition for new business has intensified and swap rates have eased, despite the fact that Santander hiked selected rates last week very slightly.
He continued: “Looking ahead, as buyer confidence and transaction volumes begin to return, some lenders may become more aggressive on pricing to capture greater market share.
“Whether that happens immediately will depend on this week’s wage data and Wednesday’s inflation figures. Softer data could accelerate further cuts, while stronger readings may see lenders pause despite the competitive backdrop.”
Samuel Mather-Holgate, Managing Director at Swindon-based Mather and Murray Financial, believes rates are headed in one direction, namely down: “By the start of the summer, we could be seeing mainstream residential mortgage rates starting with a two. This will be great news for those due to remortgage off higher rates caused by the Ukraine invasion.
“With the trajectory downwards, lenders will look to shave off rates to be competitive. This will continue even before the next Bank of England meeting to decide rates in early February.”
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said the next Bank of England rate decision early in February would also be key: “This week’s jobs and inflation data are pivotal but then all eyes will turn to February 5th when the Monetary Policy Committee announces its base rate decision. It’s a big few weeks for borrowers and bricks and mortar more widely.”
Photo by Ilnur Kalimullin on Unsplash
