Base Rate Increases What They Mean For Your Client’s Mortgage

Emma Graham

Business Development Director

Hodge

After three years without a change to the Bank of England base rate, it was inevitable change would come. After an initial rise in December from 0.1% to 0.25%, we’ve already seen a second increase to 0.5% in February. It’s fair to say these rapid rises have made it a chaotic time for remortgaging.

With mortgages worth £39 billion maturing in the last month alone, many homeowners will be reassessing their fi nances. When a mortgage matures, it off ers a real opportunity for mortgage holders to get their fi nances in order. However, it’s also a hugely important and challenging time for brokers and intermediaries. Data from the Financial Conduct Authority (FCA), in 2020, showed mortgage brokers lost 60% of clients to direct lender channels at the point of remortgaging.

But managing director of mortgages at Hodge, Ryan Davies wants to reassure brokers that their role is still vital in instilling customer confi dence in the mortgage market, saying: “Don’t view this as a challenge, but rather a chance help your customers make well considered fi nancial plans. “An increase to the Bank of England interest rate eff ectively means it’s going to cost more for your customers to borrow money from lenders. They’ll understandably be concerned about rising mortgage payments, especially if they’re on a variable rate. They’re going to be relying on your knowledge of the mortgage market and your support in fi nding a good deal to provide the fi nancial security they desire for the years ahead.”

The housing market has boomed during the pandemic. But as the world tries to recover from the fi nancial fall-out, and with so many mortgage deals maturing, it’s likely the increased Bank of England base rate will slow property growth.

Emma Graham, business development director at Hodge, thinks now is the time to introduce your clients to the alternatives: “Your customers may be considering selling-up, but perhaps they’d prefer to use their mortgage to add value to their home? Hodge saw a big uptake in the number of customers using 50+ and RIO products to make home improvements in the past year. Homeowners are using the funds and the fl exibility of these products to improve their surroundings and make their homes work better for them.

“Our fi xed-rate mortgage products off er stability, with fi xes over two or fi ve years – an attractive prospect which helps with the uncertainty of further likely base rate increases on mortgage payments.

“We’ve also increased the LTV on our two and fi ve-year fi xed 50+ repayment mortgages from 75% to 85%. Again, it’s about fl exibility and giving our customers what they need at this stage of their lives to help them achieve their fi nancial goals.” You can fi nd all the information on Hodge’s mortgage products here: https://hodgebank.co.uk/intermediaries/mortgages/

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