Now, we’ll start by saying that we’re probably just as baffled as you by what’s going on in the world right now.
Real wars now followed by trade wars? It certainly doesn’t feel as though we’re living in the most harmonious of times. In fact, our team of Guildford mortgage brokers all vehemently (and sadly) agree that the world has become a very different place.
However, in and amongst all the madness, there might be a glimmer of hope for those about to apply for a mortgage.
Why swap rates matter
As we’ve extensively covered here, swap rates play a significant role when it comes to how lenders price mortgage products. Essentially, when swap rates fall, so too do mortgage rates.
And, following Trump’s decision to levy significant tariffs on pretty much every country, swap rates have fallen.
As individuals, we’re deeply uncomfortable about how the global economy seems to be in freefall. Yet, as a mortgage broker in Guildford, it’s worth pointing out that if swap rates continue to fall, there is a chance that a raft of competitive mortgage deals may be released to the market.
To further compound this, the Bank of England could reduce the base rate of interest to go some way to offset rising costs in the wake of higher priced goods. This, too, could lead to lenders reducing mortgage rates.
However, as we’ve also covered over the years, mortgage rates aren’t impacted by one variable alone; there are several other things to consider, too.
The domino effect
Falling swap rates and a falling base rate is undeniably good for the mortgage market – and the housing market as a whole. After all, if more people who need mortgages to buy are moving, then the housing market becomes more fluid.
However, despite the US instigating a trade war, it doesn’t mean that it remains immune to inflation.
If inflation fears lead to US Treasury yields – the interest rates the US government pays to borrow money – increasing, then that could also push up the UK government’s equivalent (a gilt). And when gilts rise, they tend to push up swap rates.
Mortgage application considerations
We’re a team of Guildford mortgage advisers, so it’s our duty to provide a balanced view of what is happening now and, more importantly, what could happen in the context of UK mortgage deals in the future.
As it stands, with swap rates falling, we may see mortgage rates reduce in the coming weeks (if not days). And with the next decision on the base rate being made on 8 May, we’ll certainly be paying close attention.
However, it’s important to remember that any mortgage rate that you are offered today can be switched to a more preferable rate (if global economic forces result in mortgage rates falling) up to two weeks before completion.
Our advice if you are planning a move – and despite what’s happening in the world right now – is carry on regardless. And, if rates do fall, then simply switch to the rate of the day.
There are a lot of things to be slightly despondent about right now. However, with a bit of luck, mortgage rates over the coming weeks might not be one of them.
In these uncertain times, get mortgage advice that you can be certain of. Contact our team of mortgage advisers in Guildford on 01483 238280 or e-mail info@complete-mortgages.co.uk to find out how we can help you.
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