According to the Managing Director for Just US Mortgages, Dominic Hennessy, the best mortgage rates in today’s market are found at the bank, instead of at intermediaries. According to Hennessy, the 2012 mortgage market is beginning to look like the spring mortgage marked from spring of 2008 when the financial markets first started to collapse.
This is largely due to the return of ‘dual pricing,’ which is when mortgage lenders offer better mortgage deals through their online networks and branch offices instead of via the intermediary market.
Hennessy explained that the same exact thing is happening this month with most people able to save at least .25% if not more by choosing to head to a lender directly to look over available mortgage rates. On the other hand, the intermediary market is made up of some of the largest lenders in the UK.
During spring of 2008 the rates kept rising as lenders hiked up their offices on the intermediary market even though the Bank of England did not change their base rate. The exact same thing is happening now even thought the base rate is holding at the historical low of .5%.
Many of the leading UK banks have chosen to increase their rates this month resulting in higher cost SVRs and fixed mortgages for customers. Over the last few weeks some of the largest lending agents including RSB, Barclay’s, and Halifax have all announced higher mortgage rates and more banks are soon expected to follow suit.
The beginning of 2012 was a positive start for the lending market, and now that the mortgage market is kicked off banks are introducing dual pricing again in an effort to help meet the increase in lending demand and make enough funds available.
Hennessy stated that most of the lenders in the UK are caught off guard by the lending requests and they have to find a way to continue to offer funding to customers. Therefore, they have decided to return to dual pricing, hike SVRs, and create mortgage products that are higher in price.
Of course, the ironic twist to this scenario is that while they are addressing how to fund more mortgage loans, the result of these actions is going to be less mortgage applications as people decide that taking out a mortgage is no longer an affordable venture.