Is the mortgage price war continuing?

I think Halifax's rate cut yesterday showed their intentions as one of the big four banks in the UK and the drive to win business in the intermediary market. It was a bold move which I think leaves other lenders no choice but to follow in their footsteps, resulting in further rate reductions for the first quarter.

With Halifax setting the bar in the first week of 2024, I will be curious to see how quickly other banks respond to this large rate reduction.

It would be safe to assume we will see more rate cuts coming up given how frequently most lenders have been reducing. They will be wanting to get business through the door, especially those who held off last year who are returning to the market

We are expecting other lenders to follow suit, you tend to find one of the big 5 lenders reduce, then like a pack of dominos the rest follow.
The smaller lenders will hope a few of the other bigger players show their hand in the next couple of days, which we are expecting, at that stage the bun fight will start again in 2024, just how 2023 signed off.
Lenders have indicated business levels have still been slow in the last couple of months of 2023, therefore the completions for quarter 1 this year will be down.
The pressure is on, expect Halifax to reduce rates again within the next couple of weeks to keep ahead of the game.

Personally i don't feel a price war is the right term for what is happening right now. Lenders are adjusting to the changes in SWAPs, some lenders are just reacting faster than others. The issue lenders are facing at the moment is how fast they are able to move on changes. Lenders will hedge their positions based on current loan requirements, however we as brokers are encouraging clients to lock things in as early as possible and are consistently changing rates as they go down (we've saved clients hundreds of thousands, if not probably millions now in interest) and banks are having to swallow that. So some of the mortgages they are doing at the moment are likely not all that profitable or even loss making given where lenders have hedged months earlier for that debt.

UK swap rates rose on Tuesday, possibly in reaction to the events in the Red Sea, so there may be an air of caution from lenders if that continues. Certainly, Halifax was playing catchup with the other mainstream providers when they slashed their rates this week, so it doesn't necessarily mean others will follow. But overall, market sentiment remains much more positive for further rate reductions.

Without a shadow of a doubt, I am confident that in the upcoming days and weeks, lenders will undoubtedly slash rates to maintain a competitive edge. This marks just the inception of a bustling period ahead. Get ready, as things are about to heat up

With money markets down around 0.5% in the last month (about an 18% drop) the current mortgage rate war looks set to continue.
While the Bank of England has made clear noises that they aren't planning on cutting the Base Rate anytime soon, financial markets and lenders are betting quite to the contrary! In fact, we may see sub 4% 5-year fixed rates much sooner than we expected if this continues

We often see large lenders around Christmas go into a mini-shutdown, as they operate on a skeleton staff, and they expect many brokers to go into a week of hibernation. During this time, market rates have continued to fall, so lenders have some catching up to do!
Add to this, the big hitters have targets to hit, and with levels of borrowing likely to be the same as last year at best (but probably lower), they will be keen to get a good head start. Some will do this by criteria tweaks, but most are likely to do this by cutting their rates as low as they can.
I certainly expect the next week or so to be very busy when it comes to emails from lenders lowering rates.

This price war shows no signs of abiding and will only get more vicious as lenders compete to claim a greater share of the market. The start of 2023 lenders were very conservative and cautious but the mood music and sentiment has changed, everyone sees that we are over the worst of the inflation spike, that despite the best interests of the BOE with their incompetence the economy is doing surprisingly well and that the housing market has been remarkably resilient. Despite many pesimistic naysayser saying up to 30% decreases in house values we have seen a very marginal correction.
All of this gives banks confidence to lend and still see housing as a good investment to derive profits from, and at the end of the day that is all that matters, hence why we will just see this rate ware intensify over the next 12 months. Which is nothing but good news for buyers and home owners alike

Lending is a competitive market, so seeing reductions this early in the New Year isn’t surprising. Numerous rate and product changes in 2023 resulted in fewer completions and that’s had a direct impact on lenders’ bottom lines. Far from a rate war, it’s clear capturing new business is a priority and that’s good for borrowers and brokers.

I'd be very surprised if we didn't see more rate reductions in the coming days. The cuts by Halifax yesterday were aggressive, however, this just brought them back in line with most of the market as before this they were way off the pace.

2024 will see a nice bit of competition, hopefully LBG will start dropping across their group and start the downwards turn in the market. Its got to be said though, any slight hiccup long the way will have lenders drawing back very quickly. They are all much more tentative now. Its been a rough few years!

I anticipate a sustained trend of lenders lowering their interest rates, particularly on 5-year fixed rates. Lenders remain keen on lending, and in light of the reduced lending activity in 2023, they are motivated to maintain competitiveness to achieve their lending targets.

With inflation falling, base rate forecast to be cut several times this year, and lenders keen to make up for a disappointing 2023, it's no surprise to see lenders launching eye-catching rates to get a head start in 2024.