Nearly six in 10 Primis brokers (59 per cent) expect the Bank of England (BoE) to raise its base rate during the second half of this year.
In a series of surveys conducted at recent Primis events, some 14 per cent of respondents thought an increase was ‘very likely’ this year while 44 per cent thought it ‘likely’. Twenty-eight per cent considered an increase unlikely, while 13 per cent were unsure.
The prospect of higher borrowing costs comes at a time when the majority of households are still struggling with the cost of living.
Some 61 per cent of brokers said day-to-day living costs including bills, food, and energy were having the biggest impact, ahead of global events at 19 per cent and mortgage rates and borrowing costs at 11 per cent.
That pressure on household finances appears to be feeding into customers’ appetite to borrow. Fifty-eight per cent of participants said customers were becoming more cautious or delaying decisions, while a further 20 per cent said customers were increasingly prioritising shorter-term fixes.
More than two-thirds (67 per cent) named the remortgage market as providing the fastest-growing area of consumer demand at present, considerably ahead of first-time buyers at 22 per cent. Later life lending and equity release followed at 4 per cent, with buy-to-let at 3 per cent.
Brokers surveyed broadly expect demand for advice to rise over the next six months. Sixty-three per cent anticipate an increase compared with 29 per cent who expect it to remain unchanged, and 9 per cent who foresee a decline.
Demand for protection is also showing signs of increase, with 46 per cent of brokers saying so. Thirty-one per cent said demand remains broadly unchanged, while 24 per cent observe a decrease.
Michele MacGregor, Head of Sales at Primis, said: “The overwhelming feeling from Primis brokers at our recent mid-year events is that borrowers are preparing for the possibility that rates could rise again before the end of the year.
“That prospect, combined with a continued strain of higher household bills, is making many borrowers more cautious. But caution does not choke activity, and with an estimated 1.8 million fixed-rate mortgages due to mature this year, large numbers of borrowers will still need to take action in the second half of the year, which should sustain activity for brokers.
“It is therefore unsurprising that brokers expect demand for advice to increase in the coming six months. In a more precarious rate environment, the value of advice becomes greater, not smaller.
“Our priority is as ever to ensure brokers across the Primis network have the lender access, tools and support they need to help customers act with clarity rather than delay through uncertainty.”
