Brokers say increases, the first in eight months, are a sign of caution, not crisis
A flicker of rate movement has caught the mortgage market’s attention, but brokers insist the change is more about psychology than policy. With the Autumn Budget looming, many lenders are pausing to take stock rather than pulling back.
The Moneyfacts UK Treasury Report confirmed that average two- and five-year fixed mortgage rates have both nudged higher by just 0.02% - the first rise since early this year. While the increase is negligible, it has been enough to spark debate over whether the market’s period of steady declines has run its course.
Borrowers weigh timing and risk
For Katrina Horstead, pictured above right, of Versed, the shift reflects sentiment rather than substance. It feels, she said, “more like pre-Budget jitters than the start of a longer term climb.” Lenders, she added, are “pricing in uncertainty around fiscal policy and inflation,” but the move is about “caution rather than a change in direction.”
That sense of watchfulness is mirrored among borrowers. Some clients, Horstead noted, are locking in early “to get ahead of potential volatility,” while others prefer to “wait and see how the market settles post-Budget.”
She believes the fundamentals remain sound: lender appetite is “healthy overall,” though competition has “softened slightly at the margins.” Her advice to borrowers nearing the end of a deal is simple - prepare early, ideally six months in advance, “to manage a changing market effectively.”
Stability amid short-term shifts
Anish Patel, pictured above left, of A Niche Mortgages, agreed that the uptick reflects “short term volatility rather than the start of a major upward trend.” He said lenders are reacting cautiously before the Budget, but “the fundamentals haven’t changed, inflation is easing and markets still expect gradual cuts next year.”
Borrower sentiment, Patel observed, has sharpened. Clients are “more alert again,” with some locking in early for peace of mind while others are content to “ride it out and wait for potential post-Budget movement.”
Despite uncertainty, he said, “competition is still strong.” Lenders are tweaking pricing but “not pulling products,” and most “want to hold their market share.” For those coming off fixed rates, Patel’s advice is to “start the conversation early” – flexibility, he said, “lets us secure a deal now and switch later if something better comes along.”
Lenders fine-tune, not retreat
That tone of measured calm is shared by Alan MacKenzie, pictured above central, of Your Next Step, who called the recent movement “really quite marginal.” While swap rates have been volatile, he pointed out that some major lenders, including HSBC and Barclays, have actually made rate reductions this week.
MacKenzie said demand remains steady, particularly among borrowers with more complex profiles. “We’re not seeing lenders becoming more cautious,” he said. “In fact, it’s more the reverse,” with many improving policies for foreign nationals, self-employed borrowers and first-time buyers.
Caution, not crisis
The overall picture is one of watchful stability rather than retreat. The coming weeks, brokers suggest, will bring clarity rather than disruption as the sector waits to see how the Chancellor’s fiscal plan shapes confidence across the mortgage market.
