Mortgage Market Update – September 2024

As summer holidays start to fade into the rear view mirror, and everyone packs up their bucket and spades for another year, what is now sharply coming into focus will be what will happen with the Bank of England and the impact that will have on mortgage rates.

We also have a hugely exciting launch to announce which could save you huge sums on your energy bills and also shows the future direction of travel of the mortgage industry. So for all that and more, we hope you enjoy this months update:

Market Update

Does the Base Rate have any relevance on mortgage rates? – As I talked over in great detail in the last Market Update, the answer is largely no (see link for more info on that). The largest driver is the expectation of where the Bank of England will go. Unless you want to take a Tracker mortgage (which is directly linked to the Base Rate), picking the best mortgage product at present involves a lot of crystal ball work.

What is relevant though is that since the last update there has been a shift in the view that the Bank of England may cut rates sooner than expected (as reflected in the money market rates and mortgage rates below). The expectation of quicker cuts has lead fixed rates to be reduced in line with this. Indeed, the market has priced in a broadly 50/50 change that the Bank of England will cut rates again in their meeting on 19th September.

So do you Fix or Float? Ultimately, your personal situation will be the main driver as for some a longer term fixed rate is preferential or even necessary, while others may be willing to risk taking a Tracker if they expect rates to keep falling. Splitting the difference on a 2 Year Fixed Rate could well be the best course of action at present, however, expert advice is recommended before proceeding!

Resilient Home Project – We are very proud to announce the launch of a link up with Effective Homes, one of the country’s leading providers to retrofit your home to make it more energy efficient. As sustainability is at the core of what we do at Heron, this was a natural progression, and moreover, as there is a direct cost saving to you, it was a natural fit.

Something you may or may not have been overly aware of in the past is your homes EPC Rating (Energy Performance Certificate), which is a measure of your homes efficiency (A being most efficient, G being least efficient). There is a drive by both the lending community and the Government to get everyone’s home in the UK at least C or higher in the coming years, so you will see more policy and regulation appearing in this area.

So why should you consider retrofitting your home? We believe there are 3 key reasons:

SAVE Money

SAVE Energy

SAVE Carbon

Since the cost of living squeeze and energy crisis combined a few years ago, no doubt your Utility bills have been more front of mind than they would have been in the past. So this is a very timely opportunity for us to offer savings on one of your largest outgoings each month. The process is simple, we will be contacting all our clients well ahead of product renewal to invite them to have a survey/quote conducted by Effective Home. Once the results are back you can decide if this is something you want to take up once you know the costs of getting the work done (such as Insulation, Solar Panels, new windows etc) and the costs savings over time. As each property is different, the costs and type of work will differ but we are confident this will work for the vast majority of people otherwise we would not have gone down this path in the first place. Effective Home will also utilise any national/local grants available so the cost of the work is often not as much as you may have thought.

Aside from the obvious drivers of looking to save our clients money, while also benefitting the environment, we have also had one eye on the future as the mortgage industry and all major lenders are actively looking at this space and how it will affect mortgage lending. In the simplest example, as very inefficient home will have higher running costs, lenders are looking at – do we offer these people a smaller mortgage? As Affordability underpins all lending you simply can’t ignore above average Utility Bills. Conversely, lenders are also looking at how they can reward homeowners  with very efficient homes. Do they get a larger loan and/or preferential lending terms? Some lenders have already built in your homes EPC Rating in their affordability models, meaning you can borrow more on an A or B rated property, and no doubt more will follow suit. There is also a growing argument that doing this work now may even safeguard your property value over time.

Obviously this is a huge topic and more will follow in time, but at this early stage we simply wanted to share this great news and if you want to learn more, feel free to contact us and we can explain this in more detail.

Money Market & Mortgage Rates