Speaking at Mortgage Solutions’ British Mortgage and Protection Senate, Regnier said people paying off debts, businesses depositing pandemic-related loans and cheaper costs of borrowing would keep mortgage pricing low.
“Lenders have liquidity and capital. Both of those at the moment are very cheap and in plentiful supply,” he said.
Regnier also pointed to the Term Funding Scheme, which provides funding to small businesses at or close to the base rate, which is currently at a historical low of 0.1 per cent. He said smaller lenders were “filling their boots” through the scheme.
“Lenders can borrow billions of pounds of money from the government and put it bank in deposit for the same amount of interest they’ve paid for it,” he added.
As ringfencing policy means banks cannot lend outside of certain remits, Regnier predicted this would mean “constant, continual, relentless price competition until some of that excess liquidity gets used up and the returns on capital start to become less attractive overall”.
He added: “It also means a plentiful supply of very cheap mortgages for borrowers and for brokers.”
Serving the vanilla borrower
Regnier also said he could imagine that to make operations more efficient and cost-effective, larger lenders would focus on borrowers who were easier to underwrite.
He said: “The way you strip out costs with underwriting is you strip out complexity. You say ‘no’ to more stuff because if it is more simple it’s less expensive.
“That could mean borrowers with slightly different characteristics find it harder to qualify for mortgages. Which means the role of the broker is even more important than it ever was.”
Regnier said this would be good news for mid-tier lenders, such as Yorkshire Building Society, who are willing to consider cases which are a little more complex.