Brace yourselves – it looks like it’s going up

These things tend to gather a head of steam and I can’t think of a recent move in rates – and I appreciate there hasn’t been many in the last decade – which wasn’t both widely trailed and anticipated. I suspect that as we motor through April then the momentum will either gather to a crescendo, where the outcome becomes bolted on, or it will start to dissipate as the latest statistics and figures perhaps put the brakes on a hawkish approach.

Certainly, one suspects the recent drop in inflation down to 2.7% from 3% might well have scuppered any thoughts of a majority of MPC members voting for an increase in March. However, there have been a number of public utterances from Bank employees, and particularly MPC members, that make it seem like the mood music is calling a BBR move sooner rather than later, especially if low levels of unemployment do put some upward pressure on wage inflation.

If this does start to filter through then this will not be a Bank that wants to see inflation moving further away from its 2% target, especially when it considers the post-Brexit inflation drivers to have been eased back. This might well be a Bank that wants to be rather more aggressive in getting towards target, which could mean we should all brace ourselves for rather more increases over a shorter timescale. Certainly, more than a couple in two years that we were led to expect by the Governor himself, Mark Carney, at the tail end of last year. What was that about being an ‘unreliable boyfriend’ again?

With the anticipation being that BBR is on the rise again, existing homeowners not currently on fixed rates are going to need to ensure they’re ready for increased monthly payments. Recent stats suggested that ‘typical household mortgage bills’ would rise by £930 a year, if the Bank increased rates by 1%, and while no-one is expecting such big, one-off jumps, we may get to a Base Rate of 1.5% within the next couple of years, possibly far sooner.

Indeed, couched in those term, according to Savills, were rates to rise by 1% this would collectively see mortgage borrowers having to stump up an extra £4.3bn overnight in payments. That’s eye-watering and, even handing over your share of that, might make those on tracker/variable rates think about what they should be doing with their next mortgage.

For advisers, there are clearly opportunities here, and once again they’re in the remortgage market. There was much talk about the number of buy-to-let landlords who two years on from the stamp duty increases might well be looking to remortgage in the first quarter of this year, and that remortgage surge should now be working its way into the mainstream, residential sector. The big push for advisers should be working on those existing clients/borrowers who would clearly benefit from a move away from a variable rate, particularly a borrower on an SVR who could be set to save a significant amount of money each month.

At the same time, having that remortgage client on board brings with it a host of other income-generating opportunities in terms of remortgage conveyancing – in order to ensure they get quality representation rather than rely on free legals – and in areas such as protection and insurance, where the needs of an individual can change dramatically in a short space of time.

It won’t need me to tell you the ongoing value that can be generated by servicing a large number of remortgage clients, and with an impending BBR rise, you have the perfect hook to hang your ‘act now’ messaging hat on. Don’t waste the opportunity, and don’t let clients sit on uncompetitive rates which are only likely to get more expensive as the year goes on.