With swap rates moving upwards in recent weeks, lender’s attitudes towards how much risk they are willing to take on has been markedly different, with some lenders pricing conservatively to accommodate future increases in cost, and others pricing keenly to try and gain market share.
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Linda Will, managing director of Accord Mortgages, believed a lot of lenders were not currently taking many gambles. “When it’s time to go, you have to reprice but if you do it ahead of the game, you can look out of place when the market settles down. However, there are other times when it’s the other way around and looking out of place now might benefit you later. At the end of the day, you can try to hang out there now and maybe take a hit later, but I don’t see too many sharp pencils out there.”
One industry commentator identified Portman and The Mortgage Works as being one institution which had done well earlier in the year and was now taking a cautious approach, while another pointed towards Northern Rock and Halifax as lenders who were looking for market share.
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Paul Fincham, senior media relations officer at Halifax, said: “We make every effort to be as competitive as possible but swaps recently have made this tricky. It’s a difficult market out there, it’s as simple as that. But we’ll always try to be as competitive as possible.”
However, Ray Boulger, senior technical manager at John Charcol, insisted this was always the case. “This happens all the time and you always have lenders who are behind targets, and so will put out competitive products, and those who are ahead of targets who will price to generate the volumes they want without losing money. It’s no more prevalent now than at any other time.”
