“Things are about to get spicy”: is now the right time to secure a self-employed mortgage?
With the odds of the MPC hiking rates again in an emergency meeting this week shortening after Sterling’s all-time low against the Dollar, mortgage brokers offer their market observations.
Do mortgage brokers think lenders will pre-emptively hike rates this week? Will there be a surge in house buyers rushing to lock into fixed-rate mortgages before rates potentially rise further? Even as I write this, the situation is changing.
“The mortgage market, so far at least, did not panic on Monday morning about the prospect of an emergency Bank of England interest rate meeting,” said Michael Webb, Managing Director at Brandon-based Mortgage Republic
“We did not see rates being pulled or any unexpected notifications of impending rate changes. Equally, our clients have not been coming to us worried about the prospect of an emergency rate rise,” said Webb.
In part, Webb says this is because the Bank of England base rate has been stable for so long that we have a whole generation that does not realise an emergency meeting can be called, and rates increased sharply at the drop of a hat.
“Most are expecting the next increase at the scheduled November meeting, but it may come sooner than that, potentially this week. If an emergency rise does occur this week, it will be an enormous shock for many borrowers and could hit property market sentiment hard,” said Webb.
Anil Mistry, director at Leicester-based RNR Mortgage Solutions didn’t receive any updates in his inbox either from lenders about their rates changing. However, Mistry says this further highlights the urgency from all brokers where a client’s deal is ending in the next six months, to speak to their clients as soon as possible to have their mortgage and circumstances reviewed.
“Therefore, a new rate can be secured prior to any further increases of the Bank of England and in turn the lenders increasing their rates,” he said.
Which banks are pulling mortgage products?
By Monday evening, High Street banks started to get jitters. And reacted. The Financial Times reported that UK’s high street banks have started to pull mortgage loans as a result of soaring gilt yields and turbulent markets.
Virgin Money and Skipton Building Society have put a temporary stop to offering new home loans. Halifax, part of the Lloyds Banking Group, is withdrawing a range of new home loans, too, by the end of Tuesday this week.
Banks, it would seem, to be waiting and see what happens to market volatility.
Things are about to get spicy
Lewis Shaw, founder of Mansfield-based Shaw Financial Services, was expecting a market shock that would have repercussions on all of us.
“This week is about to come off its hinges as borrowers rush to try and lock into a new deal before another base rate hike tightens the screws even further,” said Shaw.
“The dire economic outlook has been fuelled by the pound dropping faster than a student at freshers week. If things continue, we’ll be cap in hand to the IMF by Friday. It’s about to get spicy and we’re approaching the end of the roll,” he said.
How are homeowners reacting?
Manooch Suree, director at Uxbridge-based first-time buyer mortgage broker, Zinga Financial Servces said his firm is seeing house buyers and people with existing rates ending soon locking into rates with urgency anyway, regardless of a potential emergency rate meeting this week.
“Mortgage rates have never been flashing so loudly on people’s radars,” said Suree.
Suree continued: “If rates were to rise again after an emergency meeting, it would lead to an even greater rush of activity in the mortgage market. It may also bring the purchase market to a grinding halt due to fears of what could happen next. We are in a highly fluid mortgage market now, with conditions changing by the day. People like certainty and there’s not much of that right now.”
Now more than ever self-employed workers should be speaking to mortgage brokers that specialise in self-employed and contractor mortgages. High Street Banks are already showing signs of jitters so will have even less time to cater to self-employed applicants. They also may unnecessarily place you at a higher risk than you really are if they are not experienced in self-employed income.