Official figures released by the Bank of England this month shows that UK inflation has dropped for the second month in a row in December 2022. Figures show that inflation was at 10.7% in November and had dropped to 10.5% in December. Not a huge drop but much better than an increase! And mortgage lenders are already starting to react to the positive outlook implied by the figures on inflation. As well as dropping rates, they are all taking fresh looks at their lending policies and dare we say….becoming more lenient and understanding? There is a real feel in the mortgage lending and broking sphere that lenders are getting hungry for business and profit.
What Are Mortgage Lenders Doing?
We can talk to until the cows come home about mortgage lenders inflating their rates at the end of 2022 in reaction to the increased BOE base rate. And then subsequently reducing them again as they realised that things weren’t as catastrophic as they had initially assumed. However, it seems that lenders are really starting to feel the impact of the rash decisions made in 2022 as their business profits are no doubt dwindling. In September and October 2022 mortgage lenders increased their rates to 5%,6%,7% and even completely withdrew their existing products in an attempt to save money and discourage borrowing. But it seems that this move has negatively impacted lenders as well as borrowers.
Over the first couple of weeks of 2023 we have seen a lot of lenders pushing new rates and products, and trying to strengthen their position in the 2023 market. Almost literally fighting over who can release the most competitive deals and who can secure the business from brokers. This might sound like an obvious move from lenders but it really is surprising to see, considering how reluctant to lend and how sceptical lenders were to borrowers last year. The only assumption we can make right now is that the mortgage lenders are starting to see their profits reduced and are getting worried. Which is good news for borrowers and brokers!
Virgin Money & Clydesdale Bank Changes To Mortgage Policies
In newly released guidance to mortgage intermediaries, lenders Virgin Money and Clydesdale Bank have both announced changes to their mortgage lending policy. They both now offer the ability to product switch on products already in a broker’s business pipeline. This means that you can now switch a borrowers already selected product onto a new product from any of the mortgage lender’s new business ranges. Virgin and Clydesdale have announced that this is available for cases that are yet to be fully offered or are within 60 days from the date on the offer if already offered.
What does this mean in our eyes exactly? It means that Virgin Money and Clydesdale have realised that one of their biggest shortcomings was not allowing product switches at this late stage, and ultimately losing out on business that they would have otherwise won if they allowed the product switch. By supporting brokers and borrowers and allowing a quick and simple product switch, they are encouraging more borrowers to use their business rather than cancelling their application and moving to a different lender. And with constantly reducing rates, this is only going to become more commonplace we suspect.
New Residential Rate Reductions From Lenders
Another example of the newfound hunger that lenders seem to be experiencing is of course the en masse reductions to rates. Thankfully we are seeing lenders reducing their rates significantly, especially over the last month or two. This comes after they all bumped their rates to over 6% at the end of last year. This has clearly not worked in the lenders favour and it seems that they are now all realising that over inflated mortgage rates won’t increase borrowing and subsequent profit…shocker.
To name every single rate reduction in recent months would be an almost impossible thing to do, but here is a round up of Skipton’s recently released rate reductions which came into affect today:
- Rate reductions of up to 0.42% across our 2 and 5 year fixed Residential product ranges.
- Introduction of our 2 and 5 year 85% LTV fixed Residential products.
- 5-year fixed, 95% LTV, 5.03%, £495 fee, available for purchase only.
- Residential 2-year fixed, 60% LTV, 4.75%, £995 fee, £250 cashback, available for purchase and remortgage.
- Residential 2-year fixed, 90% LTV, 5.26%, £995 fee, available for purchase & remortgage.
Should I Make The Most Of The Mortgage Lender Hunger?
Absolutely! Even if you are still concerned about mortgage rates, it is always worth having a free chat with one of our mortgage advisors just to see what might be available to you and if we can get you a better deal on your mortgage. We can look at remortgages and product transfers up to 6 months before your fixed deal is due to end, so if your deal is ending within 6 months, now is the time to act. Our advisors will be able to go through all of your mortgage details, your current income and outgoings status, and help you to choose the next best mortgage deal and product. We are here to help, so please feel free to drop us a message or give us a call today.