Mortgage brokers and property specialists have hailed the conclusion of the Middle East conflict, calling it the most encouraging development for mortgage pricing this year and suggesting positive movements in fixed rate pricing could occur by the end of the week. However, they warned it is not a silver bullet and stressed the need for the UK Government to address domestic factors currently dragging on property transaction levels and prices.
Positive Movement Expected
Last night, Trump revealed on Truth Social that the deal with the Islamic Republic of Iran is now complete. In a separate post, he proclaimed: "Let the oil flow!" The US naval blockade will be lifted, the Strait of Hormuz will be reopened, and the agreement will be formally signed in Switzerland on Friday.
Jamie Elvin, director of London-based Strive Mortgages, said: "An end to the conflict is undoubtedly positive news for mortgage markets, particularly if it helps ease pressure on oil prices and global inflation expectations. We could see some lenders become more competitive on fixed rate pricing in the coming weeks, but borrowers shouldn't expect a dramatic overnight shift."
He added: "While this removes one source of uncertainty, the direction of UK mortgage rates will still be driven largely by inflation, swap rates and Bank of England policy. It's encouraging for the housing market, but it's not a silver bullet."
Time Needed for Benefits to Trickle Through
Rupert Collingwood, founder of The London Broker, a property consultancy, also suggested the property market would not see overnight transformation. He said: "While the deal is welcome news, it will likely take time for any benefits to be felt by homeowners and borrowers, meaning that the immediate impact on the UK housing market will likely take time to trickle through."
He noted that interest rates are just one of several systemic factors currently impacting UK housing, including the cost of goods, energy prices, tax, and the current UK Government's legislative agenda. He added: "Whilst we must hope that the easing of traffic through the Straits of Hormuz will help to lower the costs of goods and reduce energy prices, we need to look closer to home and for our own Government to address the very real domestic factors currently causing a drag on property transaction levels and prices."
Optimistic Outlook
Emma Jones, managing director of Runcorn-based Whenthebanksaysno.co.uk, struck an optimistic note: "The end to the war in the Middle East should be a real boost for borrowers and bricks and mortar generally. Inflation fears and the increased cost of borrowing have really dented demand in recent months."
She added: "Everything, of course, depends on whether the deal that has been struck holds. There is still a lot of uncertainty. Swap rates, which are used to price fixed rate mortgages, will likely head south on the news and we may see lenders start to shave their rates in the days ahead. The full impact may not feed through until early next week after the official signing ceremony, but either way things do look more positive. The summer for the property market may yet be saved."
Cautious Views
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, added: "If this deal holds and oil pricing continues to fall, we could see positive movements in fixed rate pricing by the end of the week. The 'Trump Tax' that has been added to many household budgets could be diminishing. We are not out of the woods yet, but this is certainly the most positive announcement for mortgage pricing this year."
Chris Barry, director of London-based Thomas Legal, suggested the conflict ending "may prompt buyers and sellers in the UK to make their move." However, Justin Moy, managing director at Chelmsford-based EHF Mortgages, adopted a more cautious stance. He said: "There have been too many false dawns thus far to take any announcement at face value, so while there may be a small ripple of improvement with mortgage rates, we shouldn't be hanging on for wholesale changes just yet."
