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Lenders offering more deals under 5%

Journalist: Jake Carter, Mortgage Introducer

ended 22. November 2023

Should lenders be going further? Or are they just jockeying for position to grab headlines?

How is this impacting the market on the ground?

How are you supporting clients on to these deals with rapid rate changes?

Is the market in need of some stability or would you rather see rates continue to drop? And why?

14 responses from the Newspage community

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Editor
Aaron Strutt
Product and Communications Director at Trinity Financial
In order for the mortgage and housing market to return to normality we need more reasonably priced rates and financial stability. More sub-5% rates are very welcome, but they need to be closer to 4% before borrowers start to take notice and think mortgages are affordable again. Nationwide's latest figures were pretty shocking, with a reported near 40% drop in overall mortgage lending and this shows what a mess the market is in. Cheaper rates would go some way to helping bring demand back.
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Justin Moy
Managing Director at EHF Mortgages
The cost of money is still falling, but SWAP rates cust have slowed down these last few days, so the opportunity for a killer rate is not quite there yet. Most high-street lenders are like sheep when it comes to rate setting and will follow the first lender that makes that move. More lenders will inevitably follow suit over the next few days. The life of a mortgage broker is never easy when rates are moving up or down, with rates falling we are proactively swapping clients for cheaper rates, which has obvious benefits for the borrower, however, the financial cost to the broker firm is significant, considering that many deals booked early will now be on their 5th or 6th mortgage offer, and each change creates a report, sourcing, and other processing costs when the majority of the lenders pay around half the normal broker income on Product Transfers.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Lenders need to go further to boost consumer confidence and spur the market back into action. They are in a sense, masters of their destiny, but no one is taking the leap, and coming out with anything significant. The headline-grabbing tit-for-tat will continue as lenders for the most part are scared of being "selected" and overrun with business. This is nothing new. The housing market has not turned the corner yet, but there are signs we are getting closer.
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Craig Fish
Director at Lodestone Mortgages
Lenders do seem to be looking to place themselves at or near the top of the rate charts for the lower loan-to-value products, but more can be done for those with less of a deposit or equity. It seems that lenders want to focus on the less risky clients and on those looking to purchase. There is no support of significance to those with less equity, which is likely because of the falling house values. I don't expect to see more support at the higher loan-to-value levels until house prices show some stability. The rapid rate changes are however a challenge, but we check all our client's offers once a month and 3 weeks before they are due to be complete, to ensure they are on the best product available to them.
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Elliott Culley
Director at Switch Mortgage Finance
There certainly is a rate war between lenders right now as they try to obtain as much business as possible before the end of 2023. If swap rates continue to fall we are likely to see more reductions. Clients in the middle of remortgages and purchases need to make sure they are still on the best deal and continue to monitor the situation. For the market to continue to recover mortgage rates need to be reduced some more, especially the higher loan-to-value products.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
The recent stabilisation of interest rates is welcome news for homeowners and landlords who have been struggling with rate increases over the past 18 months. The key here is consistency and general availability of these lower rates rather than having them as ‘limited edition’ products. Surely, with swap rates being more conducive now, there is headroom for lenders to reduce product fees and bring their core product offering rates one notch lower.
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Premium
Jamie Alexander
Mortgage Director at Alexander Southwell Mortgages
Rates under 5% are a good start, but they need to hover around 4% for borrowers to perceive mortgages as truly affordable. A bit of stability wouldn't hurt. Sure, dropping rates sounds great for buyers, but too much fluctuation creates uncertainty. A stable market builds confidence, and that's the ideal key for long-term rates.

We support our clients by keeping them informed. The key is to remain nimble and well-informed. We're always keeping a close eye on market rates, helping our clients seize opportunities to get and avoid risks in the face of fluctuating rates.
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James Bull
Mortgage Broker at JB Mortgages
There are still many potential clients either waiting for rates to drop, house prices to drop, or both. This applies to both purchase and remortgage cases, as i am finding remortgage clients whose fixed rates are due to finish are reluctant to commit to current rates and would rather wait and see. I would like to see rates drop, and also government stimulus to boost transactions like a stamp duty holiday would also help.
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Steven Hargreaves
Mortgage and Protection Adviser at The Mortgage Co
We feel it is the only way forward to get the housing market moving again, with a sluggish Buy to Let market, we need First Time Buyers back in the market.
There is more work to be done by lenders the sooner lenders realise the effect the higher rates are having on the activity of higher loan-to-value buyers the sooner they will review their rates.
As soon as a lender reduces rates, which seems to be weekly, we review all clients to ensure they are on the best rate.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Lenders, just like any other business in any other sector, are adjusting the prices they are selling at based on the cost to them of buying stock. In this case, the thing they are selling and the stock they are buying is money, but other than that the same rules apply as to any other business. The rate drops we are seeing are due to the cost of funds to lenders falling.

Generally speaking, stability is what any market wants and needs for sustained growth. Any turbulence, be that rates rising or falling actually stops people from making decisions. As rates rise everyone stops and waits "for rates to fall", then when rates do start to fall everyone waits to "see how low they go". It's only when there is a reasonable period of calm and level interest rates do we see transaction levels start to increase, as that's what gives people to confidence to make these types of decisions.
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Graham Cox
Director at Bridging Hub
Lenders can only go as far as swap rates allow them to. But mortgage deals are getting cheaper, and as long as inflation continues to fall, it's likely rates will too. The cost of debt is the main reason transaction levels are so low, though the expectation of lower house prices is also playing its part.

We've just seen this government go into sharp reverse on taxes. If I was a betting man, I'd wager the Bank of England will do the same with the base rate and start cutting by the Spring.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Of course I'd love to see rates continue to decrease. That it creates a bit more work for us brokers to keep on top of is all worth it as long as our clients are better off.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
Lenders aren’t jockeying to grab headlines; they are jockeying to grab market share. They don’t make money by sitting on it, but by lending it out.
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Austyn Johnson
Founder at Mortgages For Actors
Lenders are in a bit of a pickle really, if they offer a low loan, they make no money, so they need to up the fee. Doing this means people complain about higher fees and look elsewhere. If they charge a higher rate and low fees, people complain about the rate. Non-Brokers, or 'armchair brokers' are so fixated on the rate or fees, they don't look at the bigger picture or even future-proofing. For example, some people are desperate for lower rates and dont look at the fact that the lender doesnt offer PT's as its securitised. Why become a mortgage prisoner, stuck on SVR just because you want to save a few pounds. You need to see what the best possible outcome is regardless of rates and fees, then drill down until you find the right financial plan for your client. Currently, swap rates are just over 4%, so if the rate is close to that, they will need to charge a fee.