Introduction
Lenders have depended upon short-term pricing models over the last few years as they have concentrated on customer acquisition. However, such models have meant that lenders are continuing to suffer from diminishing margins. As a result, lenders are taking a new interest in retention, which is being reflected in a change to pricing models. But to what extent will the market change?

Scope
Discusses the key pricing models currently used by lenders in the market.
Gives insight into how the market is changing and which lenders are changing their pricing strategies.
Provides an understanding of the challenges lenders face in regards to pricing.
Incorporates primary interviews from industry experts and secondary data from a wide range of sources.
Highlights
The majority of lenders continue to use short-term pricing to acquire customers. Offering low headline rates has led to low margins. To recoup these costs, lenders have continued to raise arrangement and exit fees, which have brought about regulatory and media concern.

Lenders are turning to tracker products in order to support retention. Indeed, more lenders are moving away from SVRs by reverting to a tracker rate after a product's discount rate period ends. In fact, Alliance & Leicester now has a higher proportion of its lending in tracker related products than in SVR related products.

Long-term fixed rate mortgages have also seen a rise in popularity. Indeed, a number of lenders started offering such deals in 2006, including Woolwich, the Skipton Building Society, First Direct, and Stroud & Swindon BS.

Reasons to Purchase
Identify the pricing strategies that are being successful, both in the short and long-term.
Gain an understanding of how the market is changing and what this means for lenders.
In-depth analysis of a number of pricing issues and how lenders are reacting.

Pricing Models in the UK Mortgage Market: Time for Change?