Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Brokers Warn of Borrower Caution as Base Rate Hold Expected

Brokers expect the Bank of England to keep its base rate unchanged, but warn that borrowers are becoming more cautious amid rising mortgage costs. Recent figures show a mixed mortgage market, with applications falling but gross lending slightly up.

Mortgage industry figures have advised borrowers not to delay securing deals ahead of the Bank of England's latest base rate decision. The latest Bank of England lending data shows that while mortgage applications have dropped over the quarter, gross lending has edged up slightly.

Inflation is moving towards the Bank’s 2% target, reinforcing expectations that the Monetary Policy Committee (MPC) may hold rates steady. However, a survey of Primis brokers found that most expect the Bank’s interest rates to rise again this year, with 59% believing the base rate will increase in the second half of 2025. Of these, 14% said a hike was ‘very likely’ and 44% considered it ‘likely’.

Cost-of-living pressures remain a significant concern, with 61% of brokers identifying everyday expenses such as bills, food, and energy as the biggest challenge facing customers. As a result, 58% said borrowers are becoming more cautious or delaying financial decisions, and 20% reported increased demand for shorter-term fixed rate deals.

The remortgage market is currently the strongest area of consumer demand, cited by 67% of brokers, compared to 22% for first-time buyers.

Experts have warned that recent market developments could still lead to higher mortgage costs for borrowers. Rising geopolitical uncertainty has pushed mortgage rates higher over the past month, and lenders have been repricing upward in recent weeks. The impact of these changes is expected to become clearer over the next few months.

Borrowers are being advised to consider locking into deals sooner rather than later, given the uncertainty over future rates. Homeowners on tracker mortgages would benefit if the base rate remains unchanged, as their repayments are directly linked to the base rate. However, expectations for further rate rises have strengthened, and tracker borrowers are being urged to consider how they would cope if increases occur.

Borrowers currently on standard variable rates (SVRs) are warned that waiting for fixed rate mortgages to fall could prove costly, as they may end up paying more each month if fixed rates do not ease quickly.