Many of the fixed rate products released in the last week, especially at the two-year end, have been priced at well below the current swap level.
Jonathan Cornell, technical director at Hamptons International Mortgages, commented: “Lenders cost of funding has gone through the roof recently. Two-year swaps are at around 5.80 per cent so while some of the fees are a bit chunky, many are still pricing at a loss. At the moment, longer-term deals are slightly cheaper but two-year fixes are where the battleground lies so lenders are taking a hit to stay competitive.”
Cornell pointed to Nationwide’s two-year deal at 5.04 per cent with an arrangement fee of £899 as an example of how lenders would be losing money on their ranges.
Tamsin Hemsley, media relations manager at Nationwide, said it had no plans to reprice at the present time. “We’re constantly monitoring the rest of the market to make sure we’re competitive but we have no plans to reprice at the moment. We’re keeping our eyes on the swaps market but at the minute it’s about trying to strike a balance between competitive and sustainable lending.”
Sally Laker, managing director at Mortgage Intelligence, believed brokers were in a good position to profit. “We love it when lenders are looking for market share and in this type of climate, lenders are offering left-leaning products which gives them share but not much profit. There is a challenge for brokers to find something for clients coming off a low fix from two or three years ago.”
