What Will Happen to Mortgage Rates in the UK?

people are going to experience some form of rate shock they might have done that last year or they might be coming up to kind of product maturity this year so you need to keep an eye on both both lens if you will and I think what's really really pleasing is that we saw a 40% increase in uh first time buyer numbers what did you put that down to um so I think I'm committed to helping you and answering all of your property related questions there's always a huge amount to cover but at move IQ we really are committed to supporting you through that Journey but I'd be really grateful if you do find the content useful and valuable then please do hit the Subscribe button become part of our community and will continue to deliver meanwhile let's get on with the interview Charlotte very warm welcome thank you for coming on the Pod thank you very much for having me really good really really grateful that you've come now Skipton the fourth largest building society and over a million customers this is a very substantial business I actually have a Skipton mortgage I should just get get that out get that out there to start with you've got a lot of lenders youve got a lot of buyers that you're supporting um how are you going about it how is business uh so business is good despite some of the challenges in the uh interest rate environment and I think what's interesting for Skipton is we are so we are A lender and so we're a financial service provider but we also sit within Skipton group um and that houses uh the UK's largest estate agency through conel group so we have a lot of in sight in terms of the market for kind of almost like real time transactions and what's going on okay with people in terms of instructions viewing so you get almost a feel for the market sentiment before all the data and the house indices and all of that come out yes yeah cuz there's a bit of a lag with that um so I think in terms of where we're at at the moment I would say green shoots of signs of positivity think the rates that have kind of stabilized over the last few weeks buyers are probably in a bit more of a position where they're thinking they might be ready to commit we're definitely seeing a more positive start of the year than we saw last year certainly yeah um I mean life goes on doesn't it there are challenges at yes how how have you been responding to interest rate writers I think continual repricing um we've been keeping a real close watch on on the market I think there's when I think about the in there's almost two camps of how you support people and the the markets that you've got to keep an eye on so how would you remain appealing and making sure that you're kind of open for business if you will for new customers and so that we can you know continue to provide a really competitive uh range of products and and that's why we're continually repricing all the time and then there's the second Camp which is how do you support customers that are already have taken loans with you so how do we support yourself yes it's where people are going to experience some form of rate shock they might have done that last year and or they might be coming up to kind of product maturity this year so you need to keep an eye on both both lens if you will in terms of making sure that we're helping our existing customers as well there's there's often talk in the Press about the numbers of people coming to their rate end and and that it's going to be a massive shock and and and of course it's going to be Financial s to those people involved absolutely but is it are there enough people facing that shop for it to affect the whole Market at any one time I I feel not well so whenever anybody's taking a mortgage out in the first place we don't we don't um check the can you can you afford that exact Mount And if you can afford that then that's fine we do some stress testing so we make sure that if there is interest rate movement um that there is that kind of buffer that people can afford so I think that's why we've not seeing which is positive that we've not seen kind of material levels of kind of financial distress in the market because we have been stress testing people so you can stress test them on interest rate Rises but of course we've also got inflation cost of living we have have you have you stress tested for those so we will look at if we do we look at inflation when we look at our affordability assessments but I think that's the unknown isn't it so how much of lifestyle and circumstances change from when you originally talk about your mortgage and that's not that's life circumstances people might have had children and you know life happens so you you've always got to kind of be um alive to that in terms of what can happen in in in the mortgage book in the mor but it in the same vein as you said you're open for business that is your business you want to learn money yeah want to help people yeah absolutely and and and we are doing I think you know we just we've just come to a period where we've um uh released our annual report and accounts and we've seen the kind of lending that we had last year and it was it was a a phenomenal year for us um and I think what's really really pleasing is that we saw a 40% increase in uh first time buyer numbers it is a resilient Market despite everything that you hear that's going on around us what would you put that down to a 40% increase in first time PRS yes and so so I think your products well I we SC I'm blood to say that course our products I'll say it for you thanks um I think if your ambition and your desire is there to get onto the property ladder you it's about it's not about a financial product is it it's about a lifestyle choice so as long as you can afford it the kind of the appetite and the desire and the demand remains we also saw though that rents have been increasing so if rents have increased 10% I think roughly year on year um and and people have been More Alive to that I think that's also compounded the desire for people that want to to kind of take action and move so they want the security of their own home and actually if if they if they if the rent that they're paying has now increased to such an extent it's cheaper for them to get them mortgage yeah yeah which brings us neatly sh onto the topic of of of um 99% mortgages which has been in the Press recently it's being expected in the budget there's a lot of chat about it were skip on on that topic um so as you may well know uh we have not only a 99% mortgage we have 100% mortgage um I think my view on this is anything that can help people and create another solution in the market to help people get out of the property ladder if that's what their Ambitions are it's welcome and even when we launched the track record mortgage last year whilst it might not have been the right thing for everybody it created awareness that there might be Solutions in the market that people have been unaware unaware of and there is an opportunity to kind of discuss your financial circumstances and see you to get the property ladder so do I think that that's going to solve the issue uh no because it's not that simple um but I do welcome um more Innovation into the market I also know I can see that there's you know there are potential downside yeah there's two counts of opinion is I this is 2008 we had warnings from the past when people had too much dead yes and that led us into the problem so if lenders are going to adopt this the how can you ensure that you're protecting yourself as kind of from a business perspective but it's really important that you're you are really helping people because what you don't want to do is put them into an unaffordable home that they can't maintain payments on that something goes wrong and all of a sudden they're not in a good position so the intent has to be um and the desire has to be that this is the right thing for customers this is a right thing for a borrower and it's a really delicate topic well it's a delicate thing to get right for from your perspective as a lender because you want to lend money we don't want to lend money in circumstances where isn't right for the borrower yeah and that's not right for them so I think yeah it is a delicate balance and that's why that's why for me I don't think these are ever going to be mass mass mainstream market products um because you know it has to be tailored and it has to be right for for both parties are your competitors following suit or do you think they will that being said we've been you know we've been in a higher interest rate environment people have probably been watching to see what happens with um you know their existing customer base whether or not if we come into a bit more benign environment we see more of that opening up remains to be seen but can you talk to us um our listeners our audience will be interested in in the fact that you take into account the rent when you're establishing their affordability can you just talk us to that yeah so we so we conducted some research to say we want to help more uh first time buers the property ladder what are some of the key barriers and blockers to entry and um we always know that deposit and affordability always come out as key um talking topics um and one of the key challenges I think that we saw was of people that do rent over half of them didn't ever think they were going to be able to get on the property ladder despite the fact that their rent was matching what could be or was even more expensive than what the mortgage might have been um and then we've seen it I mean everywhere in terms of um social media Etc in terms of why if I can pay my rent and I can demonstrate that I can afford it why can't I have a mortgage why is the deposit so much of the important crook of it and and so that's that was gave us comfort in that we can assess affordability we can go with no deposit but we can do that because we know that you've got proven track record you know similar style household so your bills should be similar um if you've been paying your rent on time every month all why wouldn't we want to help you it's it's something that should have been happening for years yeah so it's it's great that you're doing it really is um something else that's um that's often in the Press uh building safety issues cladding and the like um there's a lot of people affected by that at the moment and the way ahead seems unclear where where do Skipton stand on lending to to people in that situation so we so we've just signed up to um uh latest standards in terms of lending on properties uh with cladding where we know there's some remediation required but we've got um kind of the uh protection in the background and I think and that was that's quite recent so that was in December last year I think the the point on here is and it goes back to the kind of responsible lending the game which is lenders don't want to take on um loans or or um or provide borrows with debt if we if we deem that there's going to be something that comes out of the woodw that means it becomes more unaffordable but at the same time these people you know were years on since you know gremal tragedy and people are stuck in flats and um with clad and almost can't there's no option out for them so we have to do something as an industry to make sure that people have options where they can explore and move and also you know some of these properties are really really attractive for first time buyers so you want to free up that stock rather than it being sat there not able to be sold are you helping people I mean have any idea how many people you've helped in those kind of affected properties um you on the spot I know you are on the spot and the answer is I don't have it to hand but um I think I mean it's really early day still yet uh but we will I I know we will be helping people um you've heard it here first yes yes Sol says skip to external impacts cuz there's a lot of those on on the mortgage market and and the remortgage market we've got inflation interest rates election coming up obviously yes employment levels we've got International conflicts it's a really sensitive time out that yeah um how what's your view on how all of those things will kind of play out or impact your lending or ability or keenness or get the crystal all out the start to go tough one um it is tough and I think the combination is there is no certainty is there and so that's why we've seen there's never certainty but it just feels like there's a there's a level of there's an increased level of uncertainty um I think that's what we've seen play out in terms of the volatility in the market and so we've seen the impact of um you know Ukraine Russia War impact and in terms of inflation and there for what it means in terms of driving interest rates up so there is still a level of uncertainty although we have seen a bit more of a stable um kind of December January February few weeks so we are seeing um more stability I'm not saying that continues yeah and but I think the the key thing really is just be being alive to it so from a from a borrower perspective if you know that you know if you if you sat on quite happily sat on a fixed rate mortgage and you're not due to mature already anytime soon just carry on with life and don't worry I think for people that are looking to buy looking to take on new debt or people that are going to um mature off fix rates or or variable rate products they where they're going to there's going to be some movement in terms of financials start stress testing yourself because that's that's where you can always be um forearmed and kind of front running the knowledge of what might it mean and me there so many calculators in there online in terms of just you know what if interest rates so this what does it mean for me if it's x y and Zed and and then from a lender's perspective we're just alive to that in terms of continually reassessing our product rates and our range and then thinking well okay what other Solutions are there in the market that could help people and yeah it's fast moving it's very very fast moving very fast moving on your toes yes the the days of ultra low rates are are gone and probably rightly so I I always felt they were kind of held artificially low and we we went bit bonkus um any insight in what's to come though in in terms of interest rates and I think we're the market is probably expecting some form of rate Cuts this year um it keeps changing its mind on how how much about but you're alive to it of course but would be of course Very alive to it and so I think there's an expectation of Some Cuts to base right I think what's important um for people to be aware of that doesn't always from a fix rate aspected transpire through into the equivalent reduction just because of the way mortgage uh pricing works but um but I think there's probably some tempering down of rates expected over the kind of next 12 to 18 months but I agree with your I don't think we're going to go back into an ultra low rate environment so if people are expecting start seeing rates beginning with WS not not in my op can you just give me a sort of sense of where Skipton rates are at the moment so depending on kind of where your buying power is with equity and um today it's probably around going 4 and a half% up to 5 and a half% so and um have you any idea what an a if you looked into history what would an average interest rate be why you how far back in history 50 years 50 years oh no I wouldn't 25 years 25 years an a I'm going hold you I'm going to say 10% 8% interest rate maybe I don't so I mean you You' kind of answered my theory my theory is that actually we're fine it's just we're not very used to it 4 and a half% suddenly feels really uncomfortable but actually if you look into history but I would so I can I can see that argument but I would also say what's the average hives prices over that and tenure as well I think there's a there's a comfort level around where rates might go and I think at the point that you go in today's market much Beyond you know 5 and a half 6% I think it becomes a lot more challenging for people because what were house prices 25 years ago and then they're certainly not what they were they are today so actually when you think about you're pegging your interest rate and also but you're pegging that against a much bigger balance in terms of debt yes your financial payments are hefting yes so I think there's a bit I think there's a bit of a balance um and I think but I do think I I see the sentiment that we're not seeing you know don't have to be 2% for it to be affordable we've just got to get used to the idea yeah Charlotte really really grateful fantastic to talk to you keep doing what you're doing thank you very [Music] much

Channel: Move iQ

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Keywords: what will happen to mortgage rates, what will happen to morgage rates, mortgage rates, housing market, interest rates, housing market 2024, mortgage rate, mortgage interest rates, housing market update, mortgage news, uk housing market, first time home buyer, buying a house, housing market today, housing market news, uk house prices, mortgage rates today, mortgage rates today news, mortgage rates 2024, mortgage rates and housing market update, Mortgage rates uk

Id: G4jFwNxZn4I

Length: 16min 21sec (981 seconds)

Published: Tue Mar 05 2024