Mortgage price war on borrowed time

The current mortgage price war will not last forever, mortgage lenders have warned.

Lenders taking part in a panel debate at the Financial Services Expo (FSE) London in Old Billingsgate on Friday warned that recent pricing cuts were unsustainable.

Louisa Sedgwick of Leeds Building Society said: “The price war won’t continue forever, there is likely to be a jockeying for position throughout the rest of the year.

"However, I don’t see it lasting beyond this year. We’ll see some rate rises at the start of next year.”

Members of the panel were also unanimous that bank base rate would rise in 2016 and this would hit mortgage pricing.

Roger Morris of Precise Mortgages said: “I expect to see a small 0.1% increase in base rate at the start of next year.

“However I think there will be a sustained low interest rate for many years to come. I expect it to only have reached 2% by 2020.”

Ian Andrews of Nationwide Building Society felt the increase would be larger. “We anticipate a 0.25% rise in Q1 2016 and possibly another rise at the end of the 2016. I think it will be sensibly planned.”

Pat Bunton of London & Country highlighted how comments made by Bank of England governor Mark Carney had been positive for the intermediary community, especially when he signalled a base rate rise sooner rather than later.

Bunton said a rate rise is a big opportunity for brokers. “Carney’s comments earlier in the summer brought about an increase in remortgage action and the normal August dip didn’t happen.”

FSE London took place at Old Billingsgate in London’s Square Mile with over 70 exhibitors including lenders Accord, Lloyds Banking Group, Halifax Intermediaries, Santander for Intermediaries, Skipton Building Society and Virgin Money.