Coventry announces fixed rate mortgage rises across the board
Coventry for Intermediaries has this morning announced fixed mortgage rate rises across the board (see screengrab). Newspage asked brokers for their thoughts, which can be found below.
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With the recent rises in swap rates, we have seen lenders re-pricing over the past 10 days or so as they aim to get their pricing right and ensure they are not overexposed in the market. Coventry look to be doing this with these new products which is to be expected. However, with the slightly better than expected inflation figures from this morning, we will need to see what happens with SONIA swap rates and, if they start to fall, this could yet again see lenders having to reprice to remain competitive.
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It's hard to know if the timing of these rises is related to the inflation print or not. That said, Coventry don’t like being at the top of the rates tables so hopefully this is just strategic move rather than an inflation-induced panic. After all, inflation came in softer than expected.
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This is expected, as Coventry are definitely sourcing at the top currently and have probably been swamped with applications. At least they have stuck to their word and given 48 hours' notice of the rises, giving borrowers and brokers enough time to secure the cheaper rates while they can.
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Coventry Building Society are the latest lender to increase rates given the sharp increases in SWAP rates over the past few days. To their credit, the 48 hours' notice really does help brokers and borrowers secure their deals without the headache and panic other lenders put us all through, with just a few hours notice.
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Coventry had been ranking quite well over the past few days so I think this is more about managing business levels and a reaction to movements in Swaps over the last 48 hours rather than as a direct result of this morning's inflation figures — although they may have had that in the back of their mind. At least with 48 hours' notice we can make sure borrowers about to sign up to a Coventry deal can get their applications over the line in time.
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The rates war has slowly morphed into a stand-off, with lenders slowly inching back whilst maintaing eye contact. Today it's the turn of Coventry who are increasing many of their new and exsisting borrower offerings.
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It's sad news that Coventry Building Society has issued a 48-hour warning of their fixed rates increasing. They have been holding a very prominent place with rates during the past week or so and it may be that they are uncomfortable with the increased volumes of new applications they are seeing. The positive spin on this is that the UK inflation figure has rested, not increased, from its 4% figure which will inevitably return a positive feel to the all-important Swap rates in the next week, further driving UK fixed rates downwards. The mortgage rate war is not over, just taking a breather.
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I’m not convinced these moves are a result of the inflation figures, more so to keep service levels going than anything else. Coventry have been sourcing extremely well in recent days and I’d imagine their pipeline has grown as a result.
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Coventry for Intermediaries' announcement of fixed mortgage rate hikes only adds fuel to the fire. The recent surge in swap rates paired with a drop in inflation raises a red flag. Why aren't banks and mortgage lenders adjusting their rates to stimulate the market? Where is the government in all of this? Shouldn't they intervene to ensure that the market remains accessible and buoyant for prospective homeowners and investors alike? As swap rates climb and inflation wanes, the need for decisive action becomes ever more pressing.