So what has this last month brought to the mortgage market since the announcement of post-Brexit monetary policies?
For some it could be argued that they are having the intended effect. Introduced to guard against a potential slow of lending, post Brexit, the aim of these policies is to encourage lenders to keep borrowing channels open. The additional funding to banks from the central bank reserves, along with the cut to the base rate has served to push interest rates down and encourage banks to lend.
For the next four years, the Bank of England will be implementing the Term Funding Scheme. They plan to lend anything up to £100bn to banks at favourable rates, close to the lower bank rate. Banks that increase or maintain their lending will benefit from the lowest rates1. Thus, there is a considerable incentive for banks to keep lending to households and businesses.
This came hand in hand with the Bank of England base rate cut, after which lenders were urged to pass on savings to borrowers. These events, along with the increasing competition between lenders, in an ever shrinking market, are creating lots of opportunity for borrowers looking to take out a new mortgage or to remortgage.
The National Mortgage Index for July demonstrated this well, showing that there are currently more than 23,000 mortgage products on the market. This number has not been higher since 20082. We may find that this trend will continue, as lenders continue to react to the cut in the base rate.
If you are looking to take out a mortgage, you may be asking yourself if a tracker a or fixed rate mortgage would be more suited to you. Market data has suggested that recently, mortgage borrowers have been looking on tracker mortgages more favourably, due to the cut in the base rate. However, with fierce competition between lenders, you may find that a fixed rate mortgage is more attractive3
To be sure, please call us on 020 7519 4985 or send us an email to speak to one of our Specialist Mortgage Managers, who will be happy to talk through your options with you.
