Margins within the market have remained very tight despite the small Bank of England Base Rate Rise in November, with some sectors not seeing this passed on at all.
London and Country associate director communications David Hollingworth noted that the first few weeks of the year had seen lenders making small rate cuts – and this could go further.
“I think it’s going to be very competitive this year,” he said.
“We’ve reached the point where lenders are tweaking products by a matter of a few basis points on occasion – that’s how narrow the margins are getting now.
“Are we going to see lenders attracting volume with a potential loss leader, which is something we’ve not seen for some time?
“That’s good for brokers and customers – it’s a pretty interesting year ahead,” he added.
Hollingworth suggested it was not surprising that lenders could take this path, and why retention was such a key issue.
“You can understand why, when you’ve got a market that looks to be fairly flat in terms of volume and with new lenders looking to take a share of that market – the focus is going to be very much on keeping existing customers as well as gaining new ones,” he concluded.
