Mortgage Market Update - April 2026

0:01Hey everyone, it's Rob B with Rob D and you are listening to The Property Podcast. The world's a bit mad. It always has been, but it just feels a bit extra mad at the moment. And when it is like that, you have volatility in the markets and we've absolutely seen volatility in the mortgage market. So this week, we bring you right up to speed with what is happening. We bring an expert in to help us understand what's happening in the mortgage market and what steps we should be taking in this crazy market.

0:56guest to answer exactly those questions. All of that coming up in just a minute. It's time for our news story of the week now. And this week's news story comes courtesy of Rightmove. And Rob, I'm surprised by this data, but asking prices rose by 0.8 % in April. That kind of feels a bit of a disconnect from what's happening in the market now, the ambition of the asking prices of people putting their properties on the market. What do you make of this story? It is a strange one, isn't it? I was surprised to see this data because we've been talking a bit recently between ourselves and on the podcast about just how bad sentiment is.

1:34We've had some bad sentiment over the last few years, but it feels like a new level of negativity has been unlocked. But no, asking prices are up. They're normally up in April. It's normally 1.2%. This year is 0.8%. So not a big difference. And according to the data, new buyer demand is relatively flat as well. So it's 7 % below this time last year. So the whole year has been a bit more negative than last year. But it seems like the data has not seen a big hit from everything that's going on in Iran with mortgage rates and everything else. So I don't know what to make of this, Rob, to be honest.

2:06It's a very surprising data point that doesn't seem to fit in with the broader picture we've been seeing. No, especially when you consider that a lot of the major house builders that are listed on the stock market are at five-year lows so that tells you like from a sentiment point of view where they're at right now so this really does contradict a lot of what we're seeing a lot of the conversations we're having what the market is saying i'm all for it like i'm all for optimism i love a bit of optimism but i'd be really interested to see next month's number and see where this goes is this the potential of a green shoe i will call it a green shoe far from it is it the potential of one we'll see i think we need a little more data though before we start to get excited and say okay we're out the worst of it although we talk about the worst of it all the time and the worst brings opportunities so putting deals together right now is amazing you just have to be braver so it's getting over your emotions i think that's key so maybe if you are a switched on investor and you're loving this market and taking advantage of it you don't want to see those green shoots but i know a lot of people in the industry would welcome a slightly easier life so i'm sure they'll be hanging their hats on this one and hoping it's the start of some good news well if there's one topic that's going to determine what does happen in the market and how people feel about investing that is mortgage rates mortgages are always one of the topics that we get the most questions about and over the last month or two.

3:33It's gone absolutely nuts. Everyone wants to know what's coming next and what they should be doing. So we managed to talk Nick from Framework Mortgaging into swinging by the office to sit down with Rob B. And Rob took the opportunity to grill him about exactly what he's seeing right now. He does this all day, every day. What is he seeing in the market? Where does he believe rates are going to settle? And most importantly, what is he advising his clients to be doing right now? Everyone likes listening to this type of episode because people want to be up to date. But I think this is more important than ever I am now, because a lot is going on.

4:05So I'm going to give you a really broad question. What on earth is going on with the mortgage market at the moment? Well, the one key word is uncertainty. So obviously we're in a very delicate situation at the moment. You know, let's be cold about things for a second and I'm thinking we'll forget there's a war on at the moment. When you actually look at the numbers as they are today, the Sonia swap rates, the five-year Sonia swap rates have currently at 3.9%. And when you compare that to this time last year, there were 3.7%. So when you drill down to the basis points, it's only a 0.2 % difference year on year.

4:42So when you consider the situation we're in, I'm quite thankful it's not a lot worse with the interest rates. Before we go into it, can you explain to people what a swap rate is and why it's important? Because most people just think about mortgages and they think about interest rates because that's what everyone talks about interest rates but actually there's something else that's arguably more important with mortgages and they're called swap rates so can you just do like a basic explanation for everyone of what a swap rate is in simple terms it reflects market expectations of future interest rates and the cost of fixed rate funding over that particular period so uk lenders use this rate as core pricing benchmark so the five years on your swap rate for five-year fixed-rate mortgages.

5:24So if the swap rate rises, then the cost of funding increases and your mortgage rates typically go up and then vice versa. So is it fair to say that the lenders, they borrow against the swap rates and then charge a margin on that? So they're not borrowing at the interest rate, they're borrowing at the swap rate. And when there's volatility there, that then transfers to the rest of us with the volatility we've seen recently. I think the key and easy mistake for clients or investors to make is they focus on the banking billion base rate. They're seeing it stable or a few months ago, seeing the projections to come down.

6:00So that's where they're expecting their interest rates to come down. So the expectation should be to review the Sonya swap rates and hopefully we see those reduce over the coming months. But again, we're in a very delicate situation at the moment. We're in a period of uncertainty. We just need some kind of positivity to come out of the conflict in the Middle East in terms of a road to conclusion. And if we get some confidence, we get a conclusion, then fingers crossed the Sunday swap rates will reduce accordingly. So what have they been doing then, bringing this up to speed? Yes, absolutely, Rob.

6:30If there is volatility in the markets, if the markets don't have confidence, then you are going to see the reductions and increase in the Sunday swap rates. And that will directly impact our mortgages. For example, during the period where we saw rates increase to 4.2, 4.3 rates, I mean the Sunday swap rates, the rate shot up. And I think lenders will always give that element of comfort for themselves and price conservatively just while they wait to see how this all pans out. But yes, the volatility is there. And I think we will find lenders being quite conservative at the moment. Okay. So we had the peak of it in the fours.

7:10Now it's dropped back down. Have lenders been passing that on or have they been withholding on us? I think the first important point to mention is lenders want to lend and they have their hands tied by their funding lines. So we had some positive news come out of the markets last week or out of the conflict last week. And we was expecting to come into this week to have rates reduced again. You know, last Friday, all prices reduced up to 10%. So that just shows you the volatility is there. And also, the markets are ready to reduce rates when they see that confidence in the market. like I say the Sunday swap rates are at 3.9 % which given the scenario we're in does show some resilience in the markets because it's not really pricing in a full-blown kind of economic crisis at the moment like I say it's only 0.25 above this point last year and also when you kind of look at the numbers a little bit further in December the Sunday swaps are 3.8 February 3.7 it was 3.6 at some point towards the end of last year as well.

8:14So when you look at 3.9 % for the SONIA swap rates, considering the headlines we're seeing, it could be worse. So what we're focusing on now at the moment is trying to see some confidence in the market to try and stabilise that SONIA swap rate. And like I say, lenders do want to lend and they'll be eager to lend and they'll just be monitoring the markets quite closely. Okay, so they haven't passed it on yet in any meaningful way? I think lenders will be conservative. I don't think we're going to see any sudden drops. You know, if the Sunday swap rates do reduce, there is going to be an element of wait and see.

8:50Because as we've seen over the last three or four weeks, there has been high volatility in the market. We have some positive news and get quite hopeful. And then that turns out not to be the case. So what lenders want to see is some rate stability. they'll want to see a six fire the strait of hummus opening their oil supply ease and the inflationary risk lesson i think the main thing is post-conflict seeing how that impacts oil supply and then the inflationary risk as well but also the most important thing is there's a lot of lenders in this market who want to lend so once someone is confident and do reduce their rates there's going to be a domino effect where they expect of lots of lenders to follow suit.

9:37You know, always remember that, like I say, lots of lenders in this market and they all want to retain their place in the market. So for example, if a lender wants to be the cheapest in the market, they'll always be the cheapest in the market. So I think the bottom line is that lenders going to be extra careful right now and that's going to be dictated by their internal governments and their funding lines. But at the same time, they do want to lend and we might see that domino effect once we see some stability in the Sony swap rates. Okay, so fingers crossed that will happen soon. And is it fair to assume, and I know you can't make guarantees or promises here, but if we have a conclusion, or when we have a conclusion, because all we'll conclude in the end, when we have a conclusion, which is hopefully very soon, swap rates will fall again?

10:21Yes, absolutely, Rob. I think it all comes down to clarity. So when the markets see and feel that there's some kind of ceasefire, and there's not going to be an energy crisis, inflationary risk, then we'll see a stability in the Sun here swap rates and that's when the rates will hopefully reduce. And it's a really interesting market at the moment because it felt like to me, and I'd love your point of view on this, that we had a really difficult last year in the market, the property market. And then we felt at least, speaking to developers, which we do on a daily basis and investors, that we felt January there was green shoots.

10:59There was just more confidence coming back into the market. And then this has derailed it again. And it feels like we've gone back to the, probably just to the worst point as it was last year. Is that how you're seeing it? I think as an investor, you obviously can't predict things and how race we're going to go. Obviously, we live in a crazy world and it's going to be volatility over the next couple of years, I would say. So I think as an investor, you just got to focus on asset quality, your purchase price and your interest rate, all three kind of married together to give you a good investment choice.

11:33And again, picking the right product for your investment as well will kind of steer you in the right way. It's still the same question, two year versus a five year fix. For example, a couple of years ago, clients were asking me the same question and I said five years and we're probably all very thankful that we did pick five years at the time. And two years ago, it was very easy to sit there and go, I think interest rates are going to come down. and then you'd be in quite a tricky spot at the moment. So I think it all comes down to looking after your portfolio, being diversified in terms of fixed rates and just not counting our chickens essentially when we see some good rates and thinking it's going to stay like that forever.

12:13It stress your portfolio as well. What happens if you hit a certain interest rate? And again, it goes back to asset quality. If you've got a good quality asset in a good area with good projected appreciation and good quality tenants with not a lot of attrition. And I think you'll be good for the next few years or so. I mean, the flip side is from our point of view, because it's pretty much as bad as it was at the worst point last year, the deals are back in that window again. We started to see the discounts we could achieve on deals start to soften at the beginning of the year. And then this has allowed us to go aggressive with the deal making that we're doing.

12:50so at least if clients out there and any investor you know because not everyone's going to wear a property of investing nor should they but anybody out there right now should be putting particularly strong deals together because while the interest rates and the Sony swap rates are peaky at the moment you're more than offsetting it well you should be more than offsetting it with the strength of the deal that you're able to achieve in a market like this absolutely interest rate is one element of an investment strategy and purchase price as you're saying is a really critical part of the investment journey.

13:21So if you're perceived to be overpaying on your mortgage for the opportunity of purchasing a particular property at that time, then your purchase price has got to reflect that essentially. So if you're not taking married those three elements together, then your investment strategy should hopefully be a solid one. Definitely. Okay, so let's move on to what probably would have been the biggest news in the market right now, but something else is obviously hijacked that, but the Renters' Right Act. That's going live on May 1st. Are you seeing any lenders addressing their stress testing for new purchases or starting to look at treating things differently?

13:57It might be a little bit too early for that, but are you seeing any changes from the lenders with that deadline? Nothing at the moment. And when you look at the headlines, obviously there will be a mild concern from a lender and a funder perspective regarding stability of income. There have been no announcement on news yet regarding the changing of criteria. I think the obvious discussion will be around the rental stress test. But like I say, there's been no news around that. I think it's important to say here that five-year rental stress tests, even if they are tight and slightly still pass with flying colours.

14:30So again, focus on rental stress tests. If they were tightened, it would only really impact two-year fixed mortgages in a higher rate environment. So yes, There's been no news on that yet. I mean, thinking creatively about it, I mean, for example, this, yeah, dictate that I need cash in bank as a trading business, and maybe lenders might want to see residual cash reserves to catch any kind of rental attrition or gaps. But there's been no news yet, and I don't think lenders are going to want to provide any more layers or barriers to entry to provide 75 % buy-to-let mortgages. With those green shoots that we did have and stamped on a little bit, were you seeing any interesting new types of products come into the market, whether it's for traditional buy-to-let or HMOs or investors who like to develop?

15:21Is there anything new or interesting or creative come into the market, or has it been pretty much as was because we didn't have long enough of that good time? I think the focus at the moment is on interest rates and Bicelet lenders, whether it's HMO, development lenders, or standard vanilla Bicelet are just concentrating on having good interest rates with a half decent product fee. You're going to continue to see the lower cost lenders in that world offer free valuations, which is great. And we do see bridge to lap for refurb products as well, which kind of mitigates some valuation risk at the end of a refurbishment.

15:59Like I say, I think for lenders at the moment, they're just focusing on boring buy-to-let, make the products as standard as possible, and let's just get some good rates out there. So we talked about people taking out new mortgages and how they should be taking advantage of the volatility and more than offsetting that increased monthly cost with the strength of the deal they're getting. That's one group. But you've got another group who don't have any choice, and they're the group that have come to the end of their products, unfortunate moment, right now, or about to. what advice are you giving to those clients because they can't you know go and get a bad deal they've already owned the property so how should they be approaching this tricky period of time i think the first thing is to speak to your broker early i mean i encourage all of our clients to reach out six to nine months before their mortgage comes to term and we're speaking to a lot of our clients every six months anyway i think the most important thing is give it yourself enough time.

16:55I think clients are obviously not in the market every day like we are, and you underestimate how long it all takes. An application to offer can take four to six weeks. So if you are remortgaging during a sensitive time, start the conversations early to understand how you can navigate through this. The main headline here is if you don't want to withdraw any equity from the property, your best bet if you're with a competitive lender is to do a product transfer which mitigates solicitor fees valuation fees etc and it keeps your cost down and if you are with a top tier low cost vice let lender you will have a half decent product transfer at the moment you may be able to put that on a two-year fix with a minimal fee and in two years you know see where we are if you do do a product transfer with the current lender it's really important not to keep loading your product fees every two years because that's just going to eat into your equity, right?

17:55So product transfer is the best bet if you want to wait and see and if you want to transact a pound for pound remortgage. Obviously, when you are going through that recommendation process, obviously, we would give the remortgage away options as well because you need to see if you're competitive in the market. There are options. Product transfer is a good place to start. So Nick, I want you to get your crystal ball out. Yeah. And I appreciate, you know, speculation is not in your remit and nor should it be but it makes for an entertaining podcast so let's go into the future into the into late summer a few months away where do you see the market then or hope the market is then okay this is obviously quite a difficult one for me to predict the future because we are like we say i feel like i'm kind of repeating myself a little bit we are in delicate times the middle east conflicts inflationary risk the oil supply change you know$900 million worth of oil had not moved so it is difficult to predict the rates and it's prudent for me not to over promise as well but what we hopefully will see and we do see positivity coming out of the markets we do see positive conversations albeit it's dashed at the same time I'd hope for rates to stay as they are in terms of the Sonia swap rates to maintain the late 3 3.9 So I think if we're there at the end of the summer, considering everything we've been through, we'll be in a good place.

19:23So if your interest rates are late balls with a 3 % fee, I think we'll be in an exceptional place. Obviously, that is all dependent on how we go over the next few months. And like I say, it's a very tender situation. But let's just keep our fingers crossed. Also, like we've mentioned before, there is an opportunity cost. So now as well, you know, property being a good asset in inflationary times in terms of the asset value. So I think we are in a sophisticated market in terms of investment. And I think like you mentioned here, we go back to the purchase price. We go back to the interest rate, all marrying together to make a good strategy.

20:01And one final question. For somebody who's looking at the deals at the moment and they're excited, that might be them doing it themselves or working with someone like us. It doesn't matter. They're just seeing great deals, but they're also nervous, which is understandable. You can be both, right? You can be excited by the opportunity, but nervous about the political environment we're in. What advice would you give to an investor who's processing that? Focusing on interest rates, I think it's really important to focus on the fact that if you apply for a mortgage today, that's not necessarily the rate that you will complete on in the future.

20:37in this environment, you want to manage the time to that completion date. So at the moment, as an example, we're working on completion dates, August to September. So if you apply today, complete September or October. So there's obviously a lot of time between now and then. There's a lot of time, like you say, for the market to recover and the Sunday SWOT to reduce, which will allow us to reduce your rate during the application process or post-offer. So it all comes back down to the client's understanding of the market and how they see the rates over the summer period. Focusing on the context of the news, if we're seeing conversations regarding ceasefires of conclusions, then that hopefully should give some confidence in the rates reducing.

21:21And again, circling back to opportunity, if you feel there's an opportunity and you're buying about markets, then hopefully by the time you get to completion, you'll be able to reduce your interest rate by 0.2, 0.3, or maybe even 0.4%. in so there you go a huge thank you to nick for taking the time to come in and enlighten us all we're really grateful to him for sharing his experience and hopefully it's left you feeling a bit more confident about what your next moves should be before we wrap up the episode we've just got time for hub extra that part of the show where we bring you a little bit more something's going to make your life a little bit better and rob i believe you've got a movie recommendation this week i have i've part watched this film a few times because my daughter has put it on tv on a weekend and I've come in and out the room and watched it and I've always thought that looks like quite a good film I've enjoyed it in the big parts of viewing it but actually sat down for the first time to watch it in the last week because I noticed on Netflix it was leaving Netflix so you probably are aware that shows come on to Netflix and shows come off Netflix so because it was leaving I got a bit of FOMO and thought right okay I'm gonna watch it in full so I sat with my daughter and watch the film i absolutely loved it is a beautiful film and i think that's the right word for this film it's beautiful it's beautifully done i think it tackles some interesting themes while still being a really fun film the cast is absolutely fantastic preparing for this pod i looked on rotten tomatoes and at first i was shocked because the scores were really low but that was from critics and then when you look at the public's ratings of this film it's really high so i think the critics have been idiots here i really missed the true beauty of this film i'd say it's a family film you can as an idol watch it all by yourself i'm sure you will enjoy it i would call it a family film above all very enjoyable lovely film heartwarming just a nice watch if you've hammered disney you haven't got anything left there and you're looking for a good family film check out if it's been out for a few years now i really enjoyed it i'm sure you will to that's an spot on i will definitely be giving that a go with the family so that is it for this week thank you so much for listening thank you to nick again for coming on to share everything that's going on in the market right now and of course we will be back to do it all again next week so we'll see you soon bye-bye bye-bye