While lenders are pulling mortgage deals after the most recent inflation figures, there’s still plenty to remain positive about.
Over the last week, there has been a lot of market coverage regarding product withdrawals and rate increases. This has, unfortunately, been the result of worse than expected inflation figures recently, where the rate fell to 8.7% in April. While this is the largest fall since the cost of living crisis began, other costs like food inflation remain high at 19%, which is one of the highest levels in 45 years.
As a result, the BoE have forecasted further base rate increases, which will have a subsequent impact on mortgage interest rates. These increases have caught many off guard, as inflation was predicted to have a sharper drop. Many in the industry will find this frustrating, especially given the positive movement we’ve seen throughout the first half of the year.
Core inflation, which excludes volatile items such as food and energy prices, is being closely watched for its impact on the overall cost of living. The unexpected surge in core inflation has left the BoE facing a challenging situation as it tries to balance economic growth and price stability.
That being said, there’s plenty to remain optimistic about. Patrick McCutcheon, head of residential at Dacre, Son & Hartley, which has 20 offices in West and North Yorkshire, said: “As is often the case, headlines and the media can paint a bleaker picture than what is actually happening.
“While lenders have pulled mortgage deals, this number has reportedly dropped from 5,385 to 5,012. Admittedly, any reduction in products is not ideal, but we can focus on the remaining number, rather than the 373 withdrawn products. There are still plenty of options available to prospective buyers, and our mortgage experts at the Mortgage Advice Bureau are well-placed to help customers find deals that will work for their circumstances.
“Furthermore, high LTV lending remains well supported, backed further by the recent launch of Skipton’s Track Record mortgage, as well as various 95% mortgages offered by multiple lenders.
“What this shows is that lenders still want to lend, and it’s important not to react too negatively to news like this, as there will always be changes and market fluctuations we need to deal with.”