Telegraph article on lender rate wars....

ended 07. July 2021

With the SDLT holiday winding down, HSBC and TSB offering rates at 0.94%, and house prices cooling (according to the Halifax today), a journalist at the Telegraph is writing a piece on a potential price war among banks. So we want to know…

  • Are lenders about to enter a price war to retain interest in the market (and maintain/acquire market share)?
  • How do you expect the property and mortgage market to change this summer? 

Keep your alert_responses short and sweet. Soundbites not War and Peace!

9 responses from the Newspage community

Star Quote
"We've seen interest rates steadily decrease over the past few weeks as lenders compete to maintain market share, so expect other mainstream lenders to follow in the footsteps of the TSB and HSBC. "Everyone assumed that house prices would settle down after the first phase of the Stamp Duty holiday finished in June, but reports of 20 buyers per property means there is more demand than supply and so it's unlikely house prices will be going down anytime soon. "I am speaking to lots of serious buyers but they are all complaining about a lack of housing stock."
Star Quote
"There's more likely to be a price skirmish than a price war, as lenders simply don't have the capacity to process huge volume of applications at the moment, unless they're happy to see their service standards drop, too. "I personally think the low rates we've seen in recent days are more about grabbing headlines than business."
Star Quote
"Expect lenders to unleash their inner Odin for the best quality borrowers in the months ahead. "With the first phase of the Stamp Duty holiday behind us, and with 5% deposit mortgages also making a comeback, lenders are definitely going to be competing for borrowers with access to larger deposits to incentivise them and also to balance risk across their lending. "The property market will still have plenty of activity due to the sheer demand for property from first-time buyers and the age-old fact that demand is outstripping supply."
Star Quote
"A full blown price war it may not be, but it's definitely worth having a flak jacket to hand. "Lenders fire shots across the bows regularly throughout the year and TSB and HSBC are the latest skirmish. These low rates are no doubt going to attract a lot of attention, not only from potential customers but also from other lenders. "We would expect the low rates to run their course and hoover up the low hanging, low risk fruit. The issue has always been how lenders maintain their service levels in the face of the increased demand generated by such rates."
"The launch of the lowest ever rates is great for consumers as banks realise that they are going to miss their second half lending targets as the Stamp Duty holiday ends, demand drops and the market softens. "But banks will need to support more sectors than the low risk, low loan-to-value demographic. Many sensible borrowers are looking at longer term rates and seeing great value in them. "Banks needing to lend puts borrowers in a strong position so now is a great time to be bagging a new rate."
"Lenders are always battling it out on price but the combination of the lowest base rate in history and the largest sale volumes in decades mean the current headline rates are more competitive than we usually see. "I don't think rates will fall much lower than they are now but I do expect them to remain competitive whilst the economy recovers. From there the only way is up so take advantage of where we are and, if suitable, fix in for longer to protect against future interest rate rises."
"Lenders aren't about to start a price war because these deals are never about getting customers as much as they are about getting in the press. Headline rates are appropriate for so few people it's obvious the reason they're used. As things get back to normal, with restrictions endin,g the property market will continue to be buoyant."
"Talk of house prices cooling is certainly premature when the number of potential buyers vastly outnumbers the amount of properties hitting the market. "The holy grail of stamp duty holidays is an irrelevance when every UK region has already seen price rises wipe out the average stamp duty saving anyway. "What we are seeing is mortgage lenders really being punchy in their attempt to win business and a price war on rates means one thing : better deals for mortgage holders."
Consumers do not need a price war between lenders as much as they need an efficiency war or a policy war. Over the last six months, clients have been faced with unacceptable waits for decisions from lenders and many have had their applications declined due to consumers using one of the govenernment support schemes. If a lender can streamline their process and decuiosn making and make allowances within their policies for those who have still earned a decent incomem over the learst two years, but have taken the government help, they will be the most successful and still maintain their profit margins.