Haresnape, managing director of residential and commercial mortgages at the lender, told the audience at the Financial Services Expo in London that banks were scrambling to boost year-end figures.
“I think it’s window dressing by the big lenders for the year-end accounts,” he said.
“So I think essentially what they’re doing is taking market share as much as possible, because that always happens at this time of year. I don’t think it’s anything surprising.”
He said lenders had been cutting back their own margins in order to lower rates but expected this price war would come to an end within the next month.
“If you look at swap rates, whilst they have settled back a bit recently, over the year they have gone up so there must be, in my opinion, some element of margin compression to get market share. I think the competitiveness of fixed rates will ease off over the next month.”
John Cupis, managing director of PMS, agreed with Haresnape but said he hopes to see more movement in the market.
“Will we see a very low five-year fixed rate, priced with decent and a reasonable upfront arrangement fee in the next year?” he asked. “That’s a really interesting question.”
“I agree with Charles that lenders will compress margin in a scramble for business next year.”
Jeremy Duncombe, director of mortgages at Legal & General, said lenders were now looking to boost net lending, as well as headline gross figures.
“The lenders now, appetite-wise, have got funding, they want to boost their net lending figures as well as their gross so they’re wanting to write more business for this year and also to move into next year.”