59% of brokers expect an interest rate rise this year

Nearly six in 10 brokers (59%) expect the Bank of England to raise its base rate during the second half of this year.

In a series of surveys conducted at recent Primis events, 14% of respondents thought an increase was ‘very likely’ this year while 44% thought it ‘likely’. 28% considered an increase unlikely, while 13% were unsure.

The prospect of higher borrowing costs comes at a time when the majority of households are still struggling with the cost of living.

61% of brokers said day-to-day living costs including bills, food, and energy were having the biggest impact, ahead of global events at 19% and mortgage rates and borrowing costs at 11%.

That pressure on household finances appears to be feeding into customers’ appetite to borrow. 58% of participants said customers were becoming more cautious or delaying decisions, while a further 20% said customers were increasingly prioritising shorter-term fixes.

More than two-thirds (67%) named the remortgage market as providing the fastest-growing area of consumer demand at present, considerably ahead of first-time buyers at 22%. Later life lending and equity release followed at 4%, with buy-to-let at 3%.

Brokers surveyed broadly expect demand for advice to rise over the next six months. 63% anticipate an increase compared with 29% who expect it to remain unchanged, and 9% who foresee a decline.

Demand for protection is also showing signs of increase, with 46% of brokers saying so. 31% said demand remains broadly unchanged, while 24% observe a decrease.

Michele MacGregor, head of sales at Primis, said: “Borrowers are preparing for the possibility that rates could rise again before the end of the year.

“That prospect, combined with a continued strain of higher household bills, is making many borrowers more cautious. But caution does not choke activity, and with an estimated 1.8 million fixed rate mortgages due to mature this year, large numbers of borrowers will still need to take action in the second half of the year, which should sustain activity for brokers.

“It is therefore unsurprising that brokers expect demand for advice to increase in the coming six months. In a more precarious rate environment, the value of advice becomes greater, not smaller."