The UK’s major lenders have refused to be drawn on whether they plan to match Yorkshire’s record low interest rate of 0.89 per cent.
News that the building society had cut interest rates on its two-year discounted standard variable rate (SVR) mortgage fuelled speculation that other providers could follow suit and spark a price war.
But some of UK's biggest lenders said they have no plans to match the rate, while others have refused to comment on the issue.
A spokesperson for Lloyds banking Group told FTAdviser there were no immediate plans to match the rate reduction, while a Coventry Building Society spokesperson confirmed it had no plans to change its rates.
Nationwide, HSBC, The Royal Bank of Scotland, Santander and Barclays Bank all declined to speculate on future rate reductions on their mortgage ranges, while a Virgin Money spokesperson said any changes to rates would be announced “at the appropriate time”.
While Yorkshire’s move has been welcomed by some, others have questioned the building society’s motives.
Atom Bank recently announced a record low 1.29 per cent deal on a five-year fixed-rate mortgage, only to withdraw it nine days later due to “huge demand”.
Such moves have led to speculation that headline-grabbing rate reductions are often thinly veiled marketing ploys designed to drum up new business.
But a spokesperson for Yorkshire said the rate cut was not intended to be a short-term measure.
Ray Boulger, senior technical manager at John Charcol, said he did not expect other lenders to rush to match the building society’s new rate.
He continued: “What you tend to find is that Yorkshire and HSBC have the lowest rate on the market, and the reason for that is they are the biggest lenders to people in the realm of direct sales.
“Lenders like Yorkshire have a need to attract footfall, and it is much cheaper for them to offer a loss-leading 2-year rate than to spend thousands on advertising. They get a lot of press coverage at no cost.
“From the consumer’s point of view, low rate does not mean best value, emphasising why consumers should get independent advice.
“Intermediaries will take into account other factors, so the only other lender that did need to compete was HSBC, and their need to do that is reducing as they are expanding the broker side.”
simon.allin@ft.com
