Appearing on the Tough Talk series with host Victoria Hartley, contributing editor at Mortgage Solutions, Seal was asked why (at the time of recording) Bluestone’s mortgage rates were around eight per cent despite swap rates settling.
Seal said: “Swap rates have stabilised since their peak, and we all know they peaked after the government’s mini Budget… but they haven’t returned back to the levels they were at six or 12 months ago.
“It’s important to reflect that product pricing, particularly through lenders like Bluestone who are reliant on warehouse funding and more complex funding structures, there is more than swap rates taken into consideration when we’re determining product pricing.”
“We’ve got our own funding costs, loss assumptions and other factors including our own operational costs. All of which are under pressure in the current market,” he added.
Seal said if the trend of falling swap rates continued then mortgage rates would follow, but it was important not to see swap rates as the only factor.
The affordability gap
With higher mortgage rates making borrowers vulnerable to refinance payment shocks and shutting potential buyers out, Hartley asked how affordability challenges would be addressed.
Seal said Bluestone was a “prudent” lender with clear parameters that it operated within when it came to affordability.
He said overcoming affordability barriers was also about “utilising the specialist lending community” to interpret the circumstances of individuals, which would form views within the lender’s own risk appetite.
Seal said he recognised that if interest rates are higher, fewer people would pass affordability assessments but said “it’s important that we don’t allow that to influence our prudent lending responsibilities”.
Watch the third Tough Talk video [10:44] below.
