I set mortgage rates AMA

[Tempname1234567]

I set the rates on mortgages, it’s kind of interesting and pretty eye opening. Just that with the caveat that anything here isn’t a replacement for real financial advice but feel free to ask me anything :)

Is setting mortgage rates primarily a competitive issue, or are you trying to manage market share (either up or down) or is it base rate +X%, or are there other major factors influencing decisions?

Haha yeah post mini Budget was carnage. I remember a couple of lenders apologising for last-minute changes at some point early last year as well though (I know one of them was TMW). It must be a mega interesting job!

Tmw have pretty deep pockets too being nationwide lol

Oh interesting! I'd have assumed in the grand scheme of things they wouldn't make much difference (but that's why I'm not doing your job haha).

One last question: do lenders reprice things to 'slow down' certain product sales because of the LTI limits, or do you just pull the products?

So contrary to popular belief the base rate has nothing to do with mortgage pricing. A banks cost of funds isn’t the BR, it’s overnight SONIA atm that is close to BR but it can diverge. Mortgages are priced on swap rates.

well the purpose is going to be driven by the strategy of the business and areas they are looking to expand in etc.

returns and business priorities, criteria, competition, future proof, reputation and brand too,

Oh, I thought they were based on the BOE base rate.

what are they based on then?

spot rates? Or a combination of things?

thanks for a very interesting AMA.

I haven’t read the whole thread yet (just about to), but interested in your qualifications, how you got into this, and how well paid it is.

Also, have you ever got it wrong? As in, realised you’d set rates too low and then had to increase them? And is there any fallout from this?

So LTI is an illusion, it’s basically a marketing ploy because it will always always be underpinned as subjective to serviceability (ie affordability). That’s why say a hsbc will lend you 4.75 x income and nationwide will say 6x. Nationwide still won’t let you take on a huge monthly repayments that you can’t make.

but if something is over performing, normally only a concern if returns are low. We can do either depends on how low.

I’m slightly embarrassed for MN that anyone is engaging with this AMA.

they are based on something called swap rates which is why right now you’ll see a fair amount of rates below the base rate and that’s because the swaps are lower than BR.

ive never set them too low, I’d have modelling to tell me the results but I can usually work that out myself, results are always at the forefront of my mind. Now have things performed in a different way than I anticipated or the market moved suddenly? Yes and then you fix forward. No consequences, I can’t predict the market if I could I’d be making millions trading lol

Yet here you are, engaging

Also there’s a lot of misconceptions on mortgages and banking in general. I’ve worked in finance for over a decade and still when I moved to mortgages learned a few things

Thank you.

could you explain (briefly) what swap rates are?

do you have a maths degree or similar?

are there many people that do your role? Ie someone at every high street bank? Is it well paid?

Thank you.

could you explain (briefly) what swap rates are?

do you have a maths degree or similar?

are there many people that do your role? Ie someone at every high street bank? Is it well paid?

Not sure what you mean by this?

Why do you think that interest rates will def go up in the longer term?

can you set them much lower please i’m due a switch in jan and ya girl needs the extra money 😭

They are basically the rates that banks charge each other to exchange interest payments over a fixed period. Things like volatility and inflation can impact them heavily.

no I don’t have a maths degree or economics, but I do have a degree but it’s not related and I’d say the best people in this area are the ones without degrees at. Those I’ve seen with economics degrees flap a little and the skills aren’t really transferable (for them)

anywhere That has lending there’ll be a team of people behind the scenes setting the pricing and making sure the journey works, the message on the rates is conveyed correctly, making sure they come up high enough on broker sourcing platforms. The scale will depend as will the scope of their role. Well paid, I guess it depends on seniority if you’re an analyst (you won’t do a lot of thinking) £40k, manager up to 60/70k snr manager up to 90k

^ and then you get your bonus on top

huge caveats because I don’t have a crystal ball. But the yield curve is coming down into 26 and then starts to slope back upwards. But this isn’t written in stone, things can happen. But inflation is stickier and if labour drive it up, then that won’t be good for rates

Wish I could my love! But it’s a good time to have a look now! All I’m saying ;)

Can I get a mortgage for a house of 400,000 on a combined salary of 70k? asking for a friend 😐

So this will depend on a lot of things;

your deposit
your outgoings
if you have any dependents
if you can afford the repayments
what term you want

It will come down to the monthly payment relative to your income. If you take home £4k a month but you’re mortgage will be £2000 and you have 2 children, and you’re rent is currently less and you’re over drawn every month. Then probably not.

Why? I'm finding it interesting 🤔

Are you an actuary op? or what kind of qualification do people in your role generally have?

No not an actuary, they tend to work more in pensions and life insurance to work with the death assumptions. Lending doesn’t need such qualifications.

ive got an utterly erroneous degree. Then a mortgage qualification (that I didn’t need it’s an advice qualification) and then I’ve done some project management course through work but they aren’t formalised as such. It’s all hands on experience