Lenders may be heading for price war

Nationwide and Barclays may have kicked off a pricing war on mortages, according to Legal & General Mortgage Club.

Legal & General’s managing director Ben Thompson said that the move by Nationwide and Barclays, which has seen them drop their fixed and tracker rates to 0.3 and 0.4 per cent respectively, cannot be matched at the moment.

However, Thompson believes that they will not sit out on their own for long, with other lenders having to meet these rates in due course.

He said: “It is of course possible that there may be a slight shaving from headline rates compared to where they stand at the moment. However, given what rates have looked like historically they are incredibly competitive today.

“Whilst this move will potentially lead to fierce price competition for mortgages, in the most part it is still targeted at borrowers perceived to be ‘low risk’, ie with large equity or deposits.

“If this competition does persist, it may force lenders up the risk curve in search of margin, eventually benefiting those with lower deposits and equity. However, there is no clear sign of this yet.”