Mortgage Brokers Urged to Focus on Borrower Needs Amidst Rising Rates

The current interest rate environment is having a significant impact on mortgage advice and lending strategies. According to Gareth Briggs, Associate Director of UK Residential Mortgages at FRP Real Estate Advisory, the biggest concern for borrowers is not where rates are headed, but rather who is coming off fixed-rate deals that were locked in five years ago.

The Bank of England base rate has been holding steady at 3.75% since the summer, and the lowest five-year fixes on the market are currently priced around 4.48%. However, this means that borrowers who locked in rates close to 1% five years ago are facing a significant payment shock when they renew their deals.

Briggs emphasizes that brokers should focus less on predicting where rates will go and more on understanding what each borrower actually needs. This includes considering factors such as refinancing, affordability, product flexibility, and longer-term plans.

He also suggests that lenders could improve the experience for borrowers by offering a longer window to lock in rates or automatically passing on rate drops before completion.