Advisers urge clients to plan for higher‑for‑longer rates despite growing cut expectations
The Bank of England’s December interest rate decision is approaching with expectations of a rate cut growing. Two brokers interviewed by Mortgage Introducer, however, offer different views on whether policymakers will deliver a cut or keep the base rate on hold.
Oxford Economics expects another knife‑edge vote, with governor Andrew Bailey likely to cast the deciding vote and, this time, lean towards a reduction. That would mark a formal turn in the rate cycle that many in the mortgage market have been anticipating, even if any subsequent easing is expected to be gradual and data‑driven.
Against that backdrop, brokers report that borrowers are less focused on a single Monetary Policy Committee (MPC) meeting and more on how to navigate a still‑challenging rate environment over the coming year.
Amit Patel (pictured top left), of Trinity Finance, expects the Bank to hold rates steady for now, arguing that the data is not yet compelling enough for a move. “My hunch is that the Bank of England will hold rates at the current level for now,” he said. “Inflation has been moving in the right direction but not yet convincingly enough, particularly once you strip out the more volatile components.”
Patel noted that the central bank is likely to remain wary of tightening too far given existing pressures on households and businesses from previous rises, and will want more information on the labour market and wage growth before risking a mis‑step.
In contrast, Austyn Johnson (pictured top right), of Mortgages for Actors, believes the case for a cut has strengthened, including on political and confidence grounds. “After the recent Budget, they would be a little silly not to cut rates,” he said.
“This Christmas, people are going to get together and have a moan about Labour. If there is a rate cut, there will be some positivity to fall back on.”
Johnson also expects the path of rates to be downwards over the next year, albeit with risks. “I do predict a slow steady drop back down to around 3-3.5%,” he said. “However, it only takes one mistake to set it all off into flux again.”
Planning beyond a single MPC meeting
Despite differing views on the immediate decision, both brokers emphasise that clients should avoid trying to second‑guess a single meeting and instead plan for a still‑elevated rate environment.
Patel is steering borrowers away from attempting to time the market. “I’m encouraging clients to focus less on trying to time the exact decision and more on building resilience into their finance structure,” he said. “The key is reviewing upcoming remortgage or refinance dates early, and ensuring that investor portfolios still perform under more conservative interest rate assumptions and stress tests.”
He expects any eventual cuts to be modest, with little prospect of a return to the ultra‑low levels seen after the financial crisis. In his view, borrowers should assume that rates remain higher than in the previous decade, even if they ease from current peaks.
Johnson, meanwhile, warns that waiting on the sidelines could mean missing opportunities, particularly in the investment market. “With residential and investment clients, at the moment, if we wait, we could miss out on some good properties being released back into circulation,” he pointed out. “Plus as we are very proactive here, if we identify that your mortgage rate has dropped, we will arrange to have your offer, pre-completion, dropped in line too.”
Products and structures in focus
In terms of product selection, Patel highlights flexibility as a key feature in the current market. Options that allow overpayments, payment holidays within criteria, or the ability to switch to another product with the same lender without heavy penalties are proving useful for clients wanting to retain room to manoeuvre as the outlook evolves.
Part‑and‑part structures can also help some borrowers manage near‑term cashflow while still reducing capital over time, he says, though suitability is heavily dependent on an individual client’s future plans, time horizon and risk appetite. For landlords and investors, he adds, lender stress tests and product fees often matter as much as the headline rate, particularly where portfolio performance is under scrutiny.
Johnson would like to see more scope to recommend variable‑rate products if the easing cycle becomes clearer, but for now remains cautious.
“I would love to be confident enough to advise some more variable mortgages in the hope that rates will keep dropping and people will save more,” he said. “However as trends go, this one isnt quite there for me yet to be confident enough to pin anyone elses money on.”
Advice‑critical market
Both brokers underline that, in a market where outcomes can diverge sharply depending on product choice and structure, professional advice is more important than ever.
“One point I’d highlight is that this is a very advice critical market,” Patel said. “The gap between the best and worst possible outcomes for a client can be significant depending on product choice, structure, terms, and lender criteria.”
He stressed the importance of advisers who understand both the lending landscape and the client’s wider financial position, particularly for landlords, portfolio investors and business owners with more complex borrowing needs.
For Johnson, while he is sceptical about elements of the recent fiscal stance, he accepts that advisers and clients alike must work within the policy framework that emerges.
“Personally I wasn’t a big fan of the Budget, but I think we do need to have some faith in what the end result will be,” he said. “They must have a plan, so let’s see where it ends. We don’t have a lot of choice in that anyway!”
With the December MPC vote on a knife edge, brokers are preparing clients for a path of gradual, data‑dependent change rather than dramatic moves, and are focusing on resilience, flexibility and early engagement as the best defences against uncertainty.
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