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Lenders Lowering Mortgage Rates for Low LTV Products: A Genuine Offer or a Marketing Ploy?

Journalist: Newsteam, Newsteam

ended 08. November 2023

  • Are lenders genuinely trying to help borrowers with low LTV products by reducing mortgage rates, or are they just trying to generate positive publicity during a slowing market?
  • Is the timing of these rate cuts, right before the Christmas Period, a deliberate attempt to capitalize on borrowers' financial stress during this time of year?
  • Should borrowers be cautious of these mortgage rate cuts, considering that they may be masking underlying market issues?
  • Mortgage Rate Cuts for Low LTV Products: A Sign of a Slowing Market or a PR Gambit?
  • Are lenders genuinely looking to capitalise on market share by lowering rates for clients with bigger deposits - and why not look at lowering rates at higher LTV products, based on recent Nationwide and Halifax house price index, showing increases in property valuations? 

11 responses from the Newspage community

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Gary Bush
Financial Adviser at MortgageShop.com
These lower rated for lower risk, to the lender, mortgage rates are a part of the lender tactics being used to generate noise from what is quite meh activity really. We are in a mortgage rate war and when there is no news this method can be used to shout about at least something in response to a competitor's lender's actions. Nothing to see here.
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Darryl Dhoffer
Mortgage Expert at The Mortgage Expert
I think we all need to take stock of the hokey cokey of lender rate reductions. Lowering rates just before the Christmas break is hardly risky for any lender, where historically transactions before Christmas are muted. Lenders are good with PR, particularly if the headline rate reductions are for those clients with 40% deposits, as they are less risky and most likely won't be huge volumes. I would have expected with the recent Nationwide and Halifax house price growth, for lenders to drink their cans of "courage" and offer higher LTV products with similar reductions, and for the remortgage products to show similar decreases in rate reductions - not trying to be "bah humbug" but all seems PR driven at the moment from lenders
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Craig Fish
Director at Lodestone Mortgages & Protection
These rate cuts are nothing more than a gesture. All lenders are currently hiding behind each other offering very marginal improvements to dictate business levels. What we need is a lender to stick their head above the parapet and offer some genuinely market-leading rates that others simply have to follow, if they want to write any business. My letter to St Nick would ask for a 2 year fixed rate below 5% and the same rates available to those looking to remortgage as well as those purchasing, as well as some lower rates for those with lower equity levels or deposits.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The recent rate reductions on low Loan to Value (LTV) products are of course welcome news, however only benefit those with high deposits or equity. These are mainly due to lenders largely being massively behind target on lending volumes this year and competing with each other heavily for the lowest-risk business and fighting for market share to reduce their lending level shortfalls. Those with lower deposits are not so greatly desired by lenders as they pose a higher risk given the trend of falling house prices and expectations of these falling further over the coming months, despite recent monthly gains in the Halifax and Nationwide house price index data.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
I believe the key driver here is the level of risk that lenders are willing to shoulder, despite the ongoing surge in house prices. High inflation and lingering economic uncertainty continue to cast a shadow. Consequently, opting for a lower loan-to-value ratio is the less risky route, leading to further decreases in the interest rates for such products. In my estimation, it might not be until March or April of 2024 before we witness any significant decline in higher loan-to-value rates.
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Luke Thompson
Director at PAB Wealth Management
Rate cuts at the moment are solely for one thing. To generate business in a quiet market. This has been coming for months during the spring and summer lenders weren't pricing to attract new business so not only were purchases down but so were remortgages as it made most sense for the majority of customers to complete a product transfer.

Lo and behold we are coming to the end of the year and I would suspect that most lenders have not hit their lending targets. The only way to rectify this is to reduce rates and try to get some business in now. I would expect to see rates continue to drop in the coming weeks as lenders jostle for position at the top of the sourcing lists.
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Elliott Culley
Director at Switch Mortgage Finance
Lower Loan to values, mean less risk for mortgage lenders, so it's no surprise that they are targeting this type of client. Especially in a climate of increased financial hardship. It would be good to see more lowering of high LTV products as this will help the majority of first time buyers. I would say the current rate reductions are on trend with the current swap rates and I wouldn't read too much more into it.
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David Stirling
Independent Financial Advisor at Mint Mortgages & Protection
Call me cynical, but this happens every year, as sure as Christmas tat is in the shops straight after Hallowe'en. Lenders now have quarter 4 to try to hit lending targets that must be pretty distant given the rest of the year has been tough - so we should probably expect more cuts (maybe even lenient underwriting decisions??) as the banks look to get their bonuses!
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Let's not look a gift horse in the mouth. Lower rates mean lower repayments for squeezed households and this is only a good thing. Only this morning one of the team revisited a rate for a remortgage ready to complete at the end of November that is now over £200 a month cheaper than it was 3 months ago. Cue a rather happy customer. Whatever the reasons, that is good news.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
Lenders are not reducing rates out of benevolence. Banks are profit hungry machines and they are reducing rates in order to attract business knowing that if their interest rates, which are basically their prices, were higher, people would shop elsewhere. It’s not a PR ploy, it’s a profit ploy and this is how free markets work.
If they are worried about house prices falling then they are more likely to try and attract low LTV business for their books and it reduces their risk.
Despite commentators trying to talk us into a downward spiral, house prices have increased according to Nationwide and Halifax’s most recent price indices. Would bank really be lending at 95% loan to value if they though property process were going to drop 15%? No chance.
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Peter Stamford
Director and Mortgage Expert at The Mortgage Uni
Facing the annual dance of rate reductions, the mortgage market's latest shuffle isn't just for show; it's a strategic play. As lenders vie for the safest bets, slashing rates on low-risk deals before the tinsel goes up, it's clear that they're chasing targets, not trends. Yet, for those of us looking beyond the PR sparkle, we're still waiting for a real leader that'll shake up high LTV rates and bring genuine festive cheer to all homebuyers