It’s no secret that lenders live and die by their interest rates. Exactly what interest rates a lender charges has a major impact on potential clients. As such, a change in the Bank of England’s base rate is a serious event. If the base rate rises, it could mean more profit, but if their rates are too high, they could lose business.
However, despite the base rate increasing by 0.5% over the last 18 months, brokers don’t seem to have been hugely affected. Whilst an extra 0.5% might not seem much, it can add up. On a loan of £10,000, it’s only extra £50, but if you have a £500,000 mortgage then that’s an extra £25,000. Yet according to a Broker Sentiment Survey by United Trust Bank (UTB), only 16% of brokers viewed the change as having negatively impacted their business. The same percentage thought that the increase had been a positive impact!
Interestingly, the survey also asked about what the impact on the UK property market had been, with very different results. For property, 27% viewed the increase as a negative impact, with only 9% viewing it positively. Nearly half the respondents also thought that the base rate would likely be raised to 1% or above (it is currently 0.75%) in 2019.
The impact of base rate changes is always unpredictable, so it’s good to hear that despite everything the last year has brought, brokers still look to be keeping their businesses on the right track!