Private bank Investec has teamed up with brokers to give wealth managers and IFAs a mortgage refresher following last week’s interest rate panic.
Advice firm London Money has been approached by a number of advisers who do not specialise in mortgages but have had clients worrying over whether or not to pay off their mortgage early and lock into a new interest rate before they potentially climb even higher.
“We’re receiving more and more inquiries about it,” Martin Stewart, a director at London Money, told FTAdviser.
More than 20 IFAs have signed up so far to register their interest in the refresher sessions.
Investec and London Money intend to put on up to three sessions before Christmas, capping each at 10 advisers.
“This is about the IFAs and wealth managers who no longer operate in the mortgage market but who will have clients concerned about what is happening,” Stewart explained.
Whilst IFAs are chartered, Stewart said they can be rusty when it comes to mortgages. “Some do look down on mortgages because it’s CeMap,” he added.
Last week, there was an exodus of mortgage products as lenders desperately tried to re-price their interest rates as swap rates rose sharply alongside the soaring gilt market.
Following the announcement of chancellor Kwasi Kwarteng’s "mini"Budget last month, which included a bundle of unfunded tax cuts, gilts shot up reflecting a fresh need for government borrowing. This destabilised swap rates, which in turn drove up mortgage rates.
At the end of last year, an average two-year fixed rate was 2.34 per cent. As of the end of last week, this average had jumped to 5.17 per cent.
“This isn’t going away. I’m pretty sure the base rate will be 4 per cent soon. People will have to move,” said Stewart.
“It’s the shock that’s affected people more, after coming out of a low interest rate environment. We’ve been inundated with clients panicking.
“Their fixed rate might not be up for a year, but they’re wondering whether to cash in now and secure a rate before expected further rises. A big part of it now is to take the sting out the tail.”
The sessions will cover why rates are where they are, what options clients have, and what a worst case scenario could be.
One of the Investec’s economists will also be on hand to answer any questions on gilts.
Stewart admitted he himself had a knowledge gap when it came to gilts and needed a fellow broker to explain this market to him.
The firm decided to call upon the help of a private bank, saying high street banks would be too busy to speak to IFAs.
At the weekend, NatWest emailed brokers notifying them of rate increases of up to 1.3 per cent on two-year deals. The bank was one of the last on the high street to hike its rates.