So everything in the mortgage market changed AGAIN when the Iran War erupted on the 28^th of February. Oh how I wish for just a few “Normal” months!

The spectre of rampant inflation and the Bank of England’s message that they “stand ready to act” spooked lenders and mortgagors into grabbing the first fixed rate they saw.

The market believed that instead of cutting the Bank Rate the BOE would instead raise them this year and SWAP rates soared. This caused the panic we saw with clients seeking safety in a fixed rate.

 I believe this panicked action has added fuel to the fire of rate rises as lenders price not only based on cost and market position and service standards with many of the raises not cost based but to get them out of the firing line and that just amplifies the rate increases as lenders jockey out of the way of the panicked clients scrambling for fixed rates.

Now, call ne contrarian if you will but my take is that this is a temporary blip and that events overnight indicate a path out of the war for both sides with the Strait of Hormuz opening again. This is a position I have taken from ball one and believe that we will soon see the Bank of England resuming its path of economic stimulation and cutting rates once we see things settle and the reality of the UK’s weak economic position again becomes its focus.

As such, I think a Bank Rate tracker is better than locking in a fixed rate when the world is going crazy (If affordable and you have the financial reliance if rates do rise).

I think that lenders have also cottoned on to the fact that this is likely to be a short-term issue and have changed the margins on trackers as they see clients only holding them for a short period.

One Major high street lender changed its margin from 0.2% above BOE to 1.1% above BOE – My thinking is that this is to discourage borrowers taking a no tie in deal and moving away when rates do fall again – They want you to lock in a fixed rate as they are making margin there…..

Interestingly another major high street lender is still priced at 0.21% above BOE….. and another has added only 0.2% to its margin…

To me, as funding costs for trackers haven’t really changed it seems to me that lenders either want chunky margins or to make the tracker option less attractive that a higher priced fixed rate…..

I may be completely wrong but it’s not unbelievable…….