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Are lenders engaging in a rate war?

Journalist: Jake Carter, Mortgage Introducer

ended 16. August 2023

As Barclays has become the last of the big six lenders to reduce rates, does this mean we will now witness a rate war?

Or are lenders simply lowering their rates slightly in order to write more business? 

8 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Lenders lend money to turn a profit. Without stating the obvious, many of them were clearly not getting enough product out the door when they hiked rates so have now started a pricing fight. Great news for consumers overall, and intermediaries as they all battle it out for market share.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The rate reductions are a mixture of confidence in the stability of the markets, providing the ability to reduce rates, and a need to hit lending targets and maintain market share, leading to the pricing war that has been seen over the last week. Both are very welcome by homeowners and would-be buyers across the UK but could be at risk of being negated if the inflation data on Wednesday is worse than expected.
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Craig Fish
Director at Lodestone Mortgages
This is not a rate war that we are experiencing, and we are unlikely to experience one any time soon. Following today's inflation data it's likely that lenders will now hold rates steady, with only small fluctuations. This is merely lenders setting their rates at levels that they should have been, to generate a little more business for themselves as, despite the wet weather we have experienced, lenders have experienced a drought.
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Daniel Hobbs
Managing Director at New Leaf Distribution
The rate war of 2023 continues as competition between lenders ramps up. Remortgage options will start to look more attractive and possibly a reduction in the numbers of product transfers.
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Kylie-Ann Gatecliffe
Director at KAG Financial
I believe this wave of reductions is now happening due to the new inflation figures that are set to be released tomorrow. Kent have released a market leading rate below 5% and I expect there is more to come. Purchase business has been quieter for lenders recently, so hopefully this will increase the confidence of those looking to buy. Hopefully the war is on and lower rates we are seeing will continue...
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Gary Boakes
Director at Verve Financial
Rate war? it feels like initial shots have been fired, but I for one would like to see some more bloodshed before we can call this a rate war. lenders can be doing more to lower rates, however in any war there will be casualties and that will be the profitability of their current pipelines as people will look to jump to the cheaper rates. So instead of the lenders slowly digging the trenches forward, lets see someone jump up and really start this rate war for proper, lets see rates tumble and at home we will see crowds of people cheering and thankful.
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Lee Gathercole
Co-Founder at Rebus Financial Services
It's very pleasing to see the big banks drop their interest rates including Barclays. Now inflation is starting to drop there is a slightly clearer horizon and banks may be more confident to fight for that top spot.

I think if lenders want to write more business they need to come up with some clever ideas regarding affordability and adjust their part & part, and max age criteria to help borrowers with the increased mortgage payments.
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Sabrina Hall
Mortgage Adviser & Protection Adviser at Kind Financial Services
Lenders have always shown a keen appetite for lending it's simply that the cost to them to lend has increased and therefore they have had to pass this on to their customer base. Now that cost is reduced they are still wanting to remain competitive and are pricing accordingly.