And, claims Frankish, the market is already seeing signs that some lenders have miscalculated, with several high street names withdrawing fixed rate products launched only recently.
“Some lenders seem to have been surprised by the Bank of England's decision to leave interested rates unchanged for the eleventh month in succession,” says Frankish. '”This means that they can no longer sustain some of the lower interest fixed-rate products that they brought out only three or four weeks ago. We are therefore seeing some of the best value products already being removed from the market, only to be replaced by slightly less competitive deals.”
Frankish argues that, because of intense competition in the marketplace, many lenders were rushed into launching products that were not sustainable in the current climate. “Because it was predicted that the Bank of England might ease the base rate by a quarter of a percent, under pressure from industry and manufacturing, lenders believed they were safe to launch their flagship low interest fixed rate deals. However, because the monetary policy committee took the view that rates were best left on hold for another month, some lenders have been caught out,” he claims.