Coventry cuts fixed rates post CPI print

Amidst a flurry of rate reductions this month, and despite a tick upward in CPI, I'm betting we'll see more lenders jumping on the bandwagon, at least until the end of the month, to keep themselves in the game. Don't be surprised if more big lenders slash their rates even further. Kudos to Coventry Building Society for giving brokers the customary 48-hour heads-up. It's a real game-changer for us to plan effectively. Hats off to them, especially since some bigger lenders haven't even hinted at rate cuts yet.

Coventry's latest rate cut was already on the cards, even before the blip in inflation data. While it's uncertain whether this signals an end to the recent rate war among lenders, the fallout over the next few days will certainly be interesting to watch. Despite the unexpected rise, it wouldn't be surprising if we see a temporary calm in lender rates instead of a reversal in the aggressive downward trend seen since the year started.

This is a response to the cuts from NatWest and HSBC earlier in the week. Fantastic news for the housing market despite the underwhelming CPI print. Let's hope the cuts keep coming.

Whilst this drop was likely planned by Coventry and they priced in a potential rise in CPI, a lot of lenders will today be looking to hold future cuts or even increase their rates. This could put pressure on the low rates currently offered by the likes of HSBC and Santander. If I was a borrower I would be looking to lock in a rate as soon as possible in case the cost of borrowing starts to edge up.

A very strategic move from Coventry Building Society this morning, announcing fixed mortgage rate decreases minutes after the inflation figure announcement confirming a slight uptick in CPI. Confidence being demonstrated is what the general public needs at times like this and this High Street Midlands lender seems full of it today. This is a promising move that may keep the rate war burning.

As I understand it, Coventry Building Society have had a phenomenal year and this small change in inflation is unlikely to have derailed their strategy to balance profit against gaining market market share. These changes are a welcome sign that lenders are still positive about the general market outlook. I think we’ll see a cooling of the rate war as rates stabilise after the huge drops we saw at the beginning of the month. It’s great to be back where we were in the spring of last year, I just hope we don’t see rates jump back up as they did in July 2023, but with the current outlook that seems unlikely.

The latest CPI figures would have come too late to prevent Coventry's mortgage rate cuts, I suspect. But I expect lenders to pause further reductions for a few days until the dust settles in the money markets. If the city interprets the inflation increase as a sign of further inflationary pressures to come, swap rates will rise, feeding into higher mortgage rates.