Mortgage advisors are warning that this year will see a continuation of the price warring between lenders that led to banks abandoning lending and industry profits taking a hit last year.
The chief commercial officer for John Charcol, Luke Somerset, suggested that this year may not even be the end of the battle among lenders to undercut each other on mortgage deals. The level of competition within the industry has produced a situation in which major lenders are reducing rates to an ever greater degree to try to stay ahead of rivals. In November last year, the average 10-year fixed rate hit 2.76%, a figure that represents a record low.
Last year also saw rates for five-year fixed loans fall at a steady pace, while the average rate for a two-year fixed mortgage during the same period has been under 2% for borrowers who have a deposit of 40%.
Somerset argued that this has created real financial problems for mortgage lenders and led to big players in the industry, including Tesco Bank, deciding to scrap their mortgage offers completely rather than try to compete. He added that there was no end to the situation in sight.
Tesco Bank made the decision to stop offering mortgage loans during the spring of last year. It said that the lack of potential for profitable expansion and the state of the mortgage market were the reasons.
With the challenges this situation presents for advisors, the skills that a CeMAP mortgage advisor qualification provides will be more essential than ever.
