Lenders believe “cuts to the base rate are still on the horizon” as TSB and NatWest announce mortgage rate reductions.
Both NatWest and TSB have said they were reducing mortgage rates, all of which will take effect on Friday (July 19).
EHF Mortgages managing director, Justin Moy, argued these further rate cuts show the potential for a “scramble” with high street lenders over the summer as they compete for business with finer margins.
“Though they may be slightly less imminent, lenders believe cuts to the base rate are still on the horizon,” he stated.
“This shows that pricing is not all about the cost of funds.
“Lenders will also use pricing to manage workloads and may be in a better position to take volume over the coming months.”
However, Whenthebanksaysno.co.uk managing director, Emma Jones, cautioned that banks “don’t appear to have got the memo from the markets which see the chances of a rate cut in August diminishing”.
She added that, equally, it may just be that lenders are trying to ignite the property market, which has been a little slower over the summer thanks to the General Election.
“Demand has definitely increased in July to date and lenders are clearly angling for more market share,” she stated.
Meanwhile, Charwin Mortgages director, Ranald Mitchell, spoke on what the reductions could mean for borrowers, stating that, while they aren’t “game-changing” for mortgage seekers, “in an increasingly competitive market, every move matters”.
“Mortgage rate reductions across the board like this will save countless individuals money and fuel healthy competition between lenders,” he added.
Additionally, The Mortgage Stop director, Rohit Kohli, pointed out the announcement from TSB represents its second reduction in the space of a week which he described as “unusual but very welcome”.
He argued this shows lenders are starting to compete for new business which “can only be a good thing for borrowers”.
tom.dunstan@ft.com
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