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Kensington kicks off rate war in "bold statement"

ended 02. January 2024

At 7:00 this morning, Kensington announced it was withdrawing its rates from tomorrow evening, in what one broker described as a “bold statement”. Brokers were expecting the rate war to start in earnest in January but this first salvo came sooner than expected on the first working day of 2024.

According to Laura Bairstow, founder at Leeds-based The Mortgage Masters: "Withdrawing rates on the 1st working day of the new year is a pretty bold statement from Kensington. Let's just hope that this isn't just scratching the surface and that many other lenders follow suit with rate reductions across the board. Fingers crossed that we start to see more reduced rates on products with high loan-to-values as this could boost the market by supporting those first-time buyers who are struggling to save for a deposit."

Justin Moy, Managing Director at Chelmsford-based broker, EHF Mortgages, said you cannot fault Kensingon's sentiment: “It may be a little early for the High Street lenders to react to the SWAP rate reductions seen over Christmas, but you cannot fault the sentiment from Kensington Mortgages first thing this morning. By the end of the week, I would imagine more mainstream lenders will look to price more competitively for purchases, with remortgage deals following right behind. The sub-4% market will hopefully be peppered with opportunities for most borrowers over the coming weeks.”

Meanwhile, Craig Fish, Director at London-based broker, Lodestone Mortgages & Protection, expects the big six lenders to make their move in the days ahead: "This announcement is a tentative step by one of the more specialist lenders, but I suspect that by the end of the week or start of next, the big six will have started to make their first moves, which will trigger a tsunami of reductions. The question is which lender will move first. For several weeks now lenders have been flexing their muscles to stay at the top of the rate charts, but what is really needed to get the market moving is some market-leading shorter term fixes and great remortgage rates across the board."

Riz Malik, Director at Southend-on-Sea-based R3 Mortgages, is expecting more lenders to hit the dance floor imminently: "We are expecting lenders to come out of the blocks aggressively over the next week in both the residential and buy-to-let sectors. It's like all the lenders are at a party and we are waiting for the first one to go onto the dance floor. Once that happens, they will all join the mortgage jive."

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8 responses from the Newspage community

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Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
Lenders have been playing the safe card, for reducing rates on low LTV products for several weeks now. The market is skittish, inflations still a shadow in the alley, and Threadneedle Street are keeping a hawk's eye on proceedings. Winds are changing and inflations whispering promises of decline, and I expect cautious reductions on higher LTV products, with gains in momentum, until they are gushing like whiskey from a smashed barrel.
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Justin Moy
Managing Director at EHF Mortgages
It may be a little early for the High Street lenders to react to the SWAP rate reductions seen over Christmas, but you cannot fault the sentiment from Kensington Mortgages first thing this morning. By the end of the week, I would imagine more mainstream lenders will look to price more competitively for purchases, with remortgage deals following right behind. The sub-4% market will hopefully be peppered with opportunities for most borrowers over the coming weeks.
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Riz Malik
Independent Financial Adviser at R3 Wealth
We are expecting lenders to come out of the blocks aggressively over the next week in both the residential and buy-to-let sectors. It's like all the lenders are at a party and we are waiting for the first one to go onto the dance floor. Once that happens, they will all join the mortgage jive.
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Editor
Craig Fish
Director at Lodestone Mortgages
This announcement is a tentative step by one of the more specialist lenders, but I suspect that by the end of the week or start of next, the big six will have started to make their first moves, which will trigger a tsunami of reductions. The question is which lender will move first. For several weeks now lenders have been flexing their muscles to stay at the top of the rate charts, but what is really needed to get the market moving is some market-leading shorter term fixes and great remortgage rates across the board.
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Platinum
Elliott Culley
Director at Switch Mortgage Finance
2024 is set to start with a bang. With swap rates significantly below 4% on 5-year fixed rates and just below 4% for 2-year fixed rates, it's extremely likely we will see widespread reductions in the days and weeks ahead. The question is not, will we see them but rather by how much. Will any mortgage lenders be bold with their reductions and lay down a real marker in the market? Once one lender reduces it will signal to others to follow, so expect rates to start tumbling soon.
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Graham Cox
Director at Bridging Hub
At present, renters looking to buy a home are in wait-and-see mode, in expectation of lower interest rates and property prices. To get mortgage activity firing on all cylinders, rates probably need to fall below 4.5% on 2-year fixes at 95% LTV. Without first-time buyers, the whole market slows down, as people further up the chain can't transact.
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James Miles
Director - Mortgage Adviser at The Mortgage Quarter
And so it begins.I expect to see the January sales be a big hit with borrowers as lenders fight it out to be top of the pops by getting a flying start to the new year. Let's hope the initial scramble retains momentum and will instill some confidence into the property market.
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Laura Bairstow
Founder at The Mortgage Masters
Withdrawing rates on the 1st working day of the new year is a pretty bold statement from Kensington. Let's just hope that this isn't just scratching the surface and that many other lenders follow suit with rate reductions across the board. Fingers crossed that we start to see more reduced rates on products with high loan-to-values as this could boost the market by supporting those first-time buyers who are struggling to save for a deposit.