You are here: Home - News -

Banks may ‘go to war’ in new pricing battle

by:
  • 25/01/2017
  • 0
Banks may ‘go to war’ in new pricing battle
Brokers have predicted that lenders may “go to war” in order to protect their market share in a new pricing scrap.

At the tail end of 2016, a number of lenders pushed their fixed rates up following swap rate movements, prompting some within the industry to predict that rates had bottomed out. In fact, some brokers forecast a “seismic shift” in pricing lay ahead.  

However, swap rates have settled since the turn of the year, with a succession of lenders unveiling more competitive deals. Just this week HSBC, Barclays and Aldermore have pushed new cheap deals onto the market.

According to a poll of Mortgage Solutions readers, more than 60% of brokers believe this is the start of a pricing war. So just how low can rates go? And is that really what lenders should be focusing on?

Deep pockets and nerves of steel

Martin Stewart, director of London Money, said that rates will go as low as lender’s margins will allow, and noted that it seemed lenders were prepared to duke it out to protect their market share.

However,he cautioned that getting into a discounting war would take “deep pockets and nerves of steel”.

He continued: “Brokers, borrowers and even lenders are now so used to the benign cost of funds that a 0.1% here or there no longer floats any one’s boat.”

Competing, but not on rate

David Sheppard, managing director of Perception Finance, said that while some of the larger lenders would focus their efforts on rate, other lenders would need to look at their criteria in order to make a play for the niche sides of the market.

He added: “I would rather the smaller lenders focus on those clients who can have difficulty getting finance – contractors, those with complex incomes and people buying non-standard and new build properties – in the first instance.  

“A race to the bottom is not healthy for anything other than vanilla lending.”

Stewart agreed, pointing out that there had been some progress with lenders starting to compete in terms of product innovation.

However, he concluded: “Sadly, the wheels continue to turn slowly in the mortgage world. The chant has to be: ‘what do we want? Innovation. When do we want it? Yesterday!”

 

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Technology and digital graphic image
Lenders told to engage with technology to have competitive edge

Mortgage lenders which make the best use of technology for customer experience are more likely to come out top over...

Close