Industry experts underline need for brokers to manage client expectations on future cuts
The Bank of England’s decision to hold the base rate today is unlikely to trigger an immediate wave of mortgage repricing, but experts said it sharpened the focus on funding costs, swap markets and borrower timing.
With a hold largely priced in by lenders, industry professionals report limited short‑term impact on product pricing, but see important signals for borrowers nearing refinancing and for certain market segments.
“In practical terms, a hold is unlikely to prompt an immediate repricing of mortgages,” said Nicholas Mendes, mortgage technical manager at London broker John Charcol. “Fixed rates are driven by swap markets and lender funding costs, not the base rate decision in isolation. When an outcome is widely expected, most of the adjustment tends to happen beforehand.”
Mendes pointed to recent stability in the swaps curve as the key influence on fixed-rate pricing. “Swaps remain relatively stable at the front end, with one- and two-year swaps in the mid threes and five-year money closer to the high threes,” he said.
“That stability has already allowed lenders to trim rates gradually and compete more actively. Some uptick in repricing has been seen this week, but further incremental reductions from the same lenders would not be surprising over the next few weeks.”
Mendes added that borrowers approaching maturity should be careful about delaying decisions solely in the hope of lower rates. “Securing a deal early and keeping it under review remains the safer approach,” Mendes said. “If rates improve before completion, brokers can often switch borrowers onto a better option without delaying plans.”
From a lender perspective, the base rate outcome was already embedded in most product strategies, according to Darrell Walker, group sales director at Chetwood Bank for specialist lenders ModaMortgages and CHL Mortgages.
“The MPC has taken a steady and cautious approach to reducing the base rate so far, and the mixed economic picture heading into today’s decision, meant lenders had already priced a hold into their rates,” Walker pointed out.
“As a result, we’re not expecting to see much of an immediate impact – either positive or negative – in response to the decision.”
In the prime central London (PCL) segment, the hold is seen as offering more of the same rather than a catalyst for renewed activity. “For the PCL market, holding the base rate will do little to inspire higher levels of activity,” said Alpa Bhakta, chief executive of prime mortgage lender Butterfield Mortgages. “However, we should not overlook the fact that the market is in a healthier position than 12 months ago and the potential for future rate cuts remains.”
Bhakta’s comments underline a theme that runs across the market: conditions have improved compared with the peaks in pricing seen in 2023, but confidence is still sensitive to the broader economic outlook and to expectations for the pace and scale of future cuts.
In buy-to-let, recent movements in swaps have already started to reshape the conversation between landlords and advisers. Like most industry observers, Steve Cox, chief commercial officer at buy-to-let specialist Fleet Mortgages, noted that lenders had acted pre‑emptively ahead of the latest MPC meeting.
However, Cox warned that firmer swap rates could limit further cuts and even trigger some reversals. “With swap rates having crept up in recent weeks, there’s now a case for landlords to act sooner rather than later,” he said.
“If upward pressure on funding costs persists, we may well see product pricing shift in the other direction. Advisers should be reviewing client circumstances now, especially for borrowers whose product rates are due to end in the first half of the year.”
For intermediaries, the hold is also prompting a reassessment of how they frame conversations with clients who had been hoping for a faster fall in borrowing costs. “It’s clear that the optics around this decision have shifted,” said Ben Allkins, head of mortgages and protection at national brokerage Just Mortgages.
“We’ve all seen mortgage rates edge back up as swap rates react to the growing expectations of fewer cuts. It’s a reminder to brokers and the wider market to not count its chickens – particularly given the challenges at home and abroad.”
Echoing Mendes’s thoughts, Allkins said the current environment calls for a more proactive stance from advisers, especially towards customers delaying decisions in the hope of renewed price competition.
“For brokers, it’s a moment to be proactive,” he said. “In particular, we need to be engaging with those clients who may have been holding off in the hopes of further competition and movement on rates.
“The focus has to shift away from a rate conversation and one that prioritises top quality, holistic advice – helping borrowers navigate the market and explore the wide variety of options still available to those from all backgrounds and circumstances.”
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