The Intermediary – September 2026 - Flipbook - Page 49
RESIDENTIAL
Opinion
Pricing has
changed,
so has advice
U
ntil earlier this
year, the mortgage
conversation for most
clients was rarely fixed
versus variable. More
oen, the question was
simply how long to fix for.
Over the past six months that has
changed. Fixed or variable has become
a much more relevant discussion, and
that looks likely to remain the case
well into next year.
September has started with a
noticeable shi in lender pricing.
A growing number of lenders have
increased rates, withdrawn products
or refreshed ranges as wholesale
funding costs have moved higher.
Individually, most of those changes
are modest; collectively, they maer
more than any single move.
At the time of writing on 8th
September, 2-year SONIA swaps
are around 4.33%, up 23 basis points
(bps) in a month, while 5-year swaps
are around 4.44%, almost 25bps
higher. Compared with a year ago,
the increases are around 69 and
75bps, respectively.
There is always a lag between
wholesale markets moving and
mortgage pricing following. Lenders
hedge at different times, have different
funding positions and, importantly,
different appetites for volume. One
lender may decide to sacrifice margin
temporarily to maintain market
share, while another will reprice
more quickly.
What we are seeing now is that lag
playing out. Wholesale costs moved
first and retail pricing is catching up,
while the underlying market is still
moving at the same time.
That does not mean lenders are
retreating from the market. While
there have been some withdrawals,
this remains very different from
periods when volatility triggered
widespread product pulls. Lending
appetite is still there and competition
remains strong.
The difference is that lenders
have less room to compete purely
on price. That creates an interesting
environment for intermediaries
because product positioning can
change quickly without there
necessarily being a dramatic
market event. A lender that looked
particularly competitive at the start of
the week may look very different by
the end of it, not because its appetite
has disappeared, but because the
margin available at the previous price
no longer stacks up.
Ahead of the curve
The bigger change for advisers is
arguably what all this means for the
client conversation.
When markets were expecting
successive Bank Rate cuts, fixed
pricing reflected that view in advance.
Borrowers could secure fixed rates
below Bank Rate because those
anticipated reductions were already
embedded in the swap curve.
That dynamic has now changed:
with the risk of further tightening
greater than it was earlier in the
year, that possibility is already being
reflected in swap pricing and, in turn,
fixed mortgage rates.
At lower loan-to-values (LTVs) in
particular, the difference between
some fixed and tracker options has
widened enough to make variable
pricing a genuine part of the advice
conversation again.
For much of the previous cycle,
the discussion was predominantly
whether a client should fix for 2-years
or 5-years. Increasingly, the beer
question is whether they should
fix at all.
NICHOLAS MENDES
is mortgage technical
manager and head of
marketing at John Charcol
That does not make trackers
universally beer value, nor does it
make fixing the wrong decision. It
makes suitability more nuanced.
A client who values certainty and
wants to know exactly what their
payment will be for the next few
years may quite reasonably pay a
premium for that security. Another
client may have more capacity for
payment movement, value flexibility
and prefer a tracker without an early
repayment charge (ERC) that allows
them to move onto a fixed rate later if
circumstances change.
Bold moves
There is also a wider factor that makes
forecasting particularly difficult
at present. At the time of writing,
aention is naturally focused on
the Monetary Policy Commiee
(MPC) meeting on 17th September.
But the next meaningful move
in UK mortgage pricing may be
determined as much by events outside
the UK as anything happening on
Threadneedle Street.
Decisions coming out of the White
House and developments in the Middle
East can move energy prices, inflation
expectations, and global bond markets
extremely quickly. Those movements
feed through into gilt and swap
markets, and ultimately into the price
lenders can offer borrowers.
For intermediaries, that makes the
job more interesting. The value of
advice is increasingly less about trying
to predict the next moves, and more
about helping clients understand
the price of certainty, the value of
flexibility and which risks they are
genuinely comfortable taking. ●
September 2026 | The Intermediary
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