Coventry for Intermediaries has made a number of product changes following the announcement of inflation figures this morning.
Despite a minor CPI uptick, rising to 4.0% from 3.9%, the lender informed brokers that it would be reducing all fixed rates for residential new borrowers, excluding its offset, interest-only and offset interest only products.
In addition, for existing borrowers, all of Coventry’s residential fixed rates will also see a reduction, excluding the same product ranges as above.
In light of this decision, Newspage asked brokers for their thoughts on the reductions in light of the inflation news, and how they may impact the market going forward.
Reaction
Justin Moy, managing director at EHF Mortgages:
“It’s brave of Coventry to announce further cuts in their fixed rates given the slight increase in inflation announced today.
“This shows exactly how competitive new business has become in 2024.
“It also demonstrates that momentum is important to lenders and their need to have a strong start to 2024, overriding their margins even if swap rates do worsen in the coming days.”
Hannah Bashford, director at Model Financial Solutions:
“As I understand it, Coventry Building Society have had a phenomenal year and this small change in inflation is unlikely to have derailed their strategy to balance profit against gaining market share.
“These changes are a welcome sign that lenders are still positive about the general market outlook.
“I think we’ll see a cooling of the rate war as rates stabilise after the huge drops we saw at the beginning of the month.
“It’s great to be back where we were in the spring of last year, I just hope we don’t see rates jump back up as they did in July 2023, but with the current outlook that seems unlikely.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“Coventry Building Society are not afraid to step into the mortgage ring and meet adversity head on.
“They have just stared down CPI and inflation blinked. This is encouraging news for borrowers after an unexpected rise in inflation.”
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“Amidst a flurry of rate reductions this month, and despite a tick upward in CPI, I’m betting we’ll see more lenders jumping on the bandwagon, at least until the end of the month, to keep themselves in the game.
“Don’t be surprised if more big lenders slash their rates even further. Kudos to Coventry Building Society for giving brokers the customary 48-hour heads-up.
“It’s a real game-changer for us to plan effectively. Hats off to them, especially since some bigger lenders haven’t even hinted at rate cuts yet.”
Ross McMillan, owner and mortgage adviser at Blue Fish Mortgage Solutions:
“Coventry’s latest rate cut was already on the cards, even before the blip in inflation data.
“While it’s uncertain whether this signals an end to the recent rate war among lenders, the fallout over the next few days will certainly be interesting to watch.
“Despite the unexpected rise, it wouldn’t be surprising if we see a temporary calm in lender rates instead of a reversal in the aggressive downward trend seen since the year started.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“These reductions from Coventry would have been planned prior to the latest inflation data, but won’t leave them exposed, as after multiple rate reductions across the market this week, they are still in the safety of the pack.”
Matthew Jackson, director at Mint FS:
“Whilst this drop was likely planned by Coventry and they priced in a potential rise in CPI, a lot of lenders will today be looking to hold future cuts or even increase their rates.
“This could put pressure on the low rates currently offered by the likes of HSBC and Santander.
“If I was a borrower, I would be looking to lock in a rate as soon as possible in case the cost of borrowing starts to edge up.”
Gary Bush, financial adviser at MortgageShop.com:
“A very strategic move from Coventry Building Society this morning, announcing fixed mortgage rate decreases minutes after the inflation figure announcement confirming a slight uptick in CPI.
“Confidence being demonstrated is what the general public needs at times like this and this High Street Midlands lender seems full of it today. This is a promising move that may keep the rate war burning.”
Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:
“This is a response to the cuts from NatWest and HSBC earlier in the week.
“Fantastic news for the housing market despite the underwhelming CPI print. Let’s hope the cuts keep coming.”
Michelle Lawson, director at Lawson Financial:
“Another rate drop from Coventry, the third one this month.
“On a day that inflation has gone up, could this be the last one before the tide turns?
“Still no sign of Nationwide…. are they still there?”
Graham Cox, founder at Self Employed Mortgage Hub:
“The latest CPI figures would have come too late to prevent Coventry’s mortgage rate cuts, I suspect.
“But I expect lenders to pause further reductions for a few days until the dust settles in the money markets.
“If the city interprets the inflation increase as a sign of further inflationary pressures to come, swap rates will rise, feeding into higher mortgage rates.”
