Around this time last year, lenders were racing to put their rates up as the fallout of the mini-budget sent swap rates rocketing. And, over the subsequent months, multiple Base Rate increases have driven a continued rise in mortgage prices. Now, however, it seems as though we have turned a corner.

In August, however, annual inflation slowed to 6.7% sparking a fall in rates, and in September, following the Monetary Policy Committee holding Base Rate for the first time in many months, they fell again. It now looks like we are near, if not at, the top of the rate cycle and added to this, lenders now have one eye firmly on their 2024 numbers and a building weight of commercial pressure.

The result is something we haven’t seen for some time – a mortgage price war. In recent weeks the phrase ‘price war’ has been creeping into a growing number of mortgage pieces in the money pages of the papers as lenders have launched, new cheaper rates to compete for business.

However, simply competing on rate alone is a one-dimensional approach that rarely works for lenders. It doesn’t take into consideration how often a lender might be eligible and affordable against its peers and can often result in a lender quickly having to pull products because it’s overloaded its service capability. Given the disruption caused by short notice product withdrawals in recent months, this is a situation that no lender or broker wants to return to.

Multi-dimensional mortgage product development, that involves a number of different factors interacting with each other to deliver a product that meets customer needs as well as the risk appetite of the lender, is a much smarter and more sustainable approach to product development. And it’s this thinking that was behind the launch of the MBT Sandbox, a predictive mortgage modelling software to empower lenders to best build, price and deliver improved mortgage propositions.

By harnessing our vast data resources from across the market, MBT Sandbox can help lenders to make smarter product, pricing, criteria and affordability decisions using advanced analytics utilising real-time data.

MBT Sandbox has already shown one lender that it was making unnecessary rate cuts to follow a peer that didn’t actually lead to an increase in volume because the limiting factor was affordability and criteria. And, on average, it has empowered lenders to achieve a 3bp uplift on current price to maintain problem.

After many months of rising rates, we are now entering a mortgage price war. Those lenders that win the war aren’t necessarily the lenders that make the deepest cuts. Mortgage pricing doesn’t work in isolation – it’s one of many levers that lenders can pull in order to influence volume. A data-driven assessment against the lender’s peers can help to accurately estimate the impact of changes to rates, predict application volumes, fees and incentives, and provide comparison to competitor products. When it comes to the mortgage price war, forewarned is forearmed.

Tanya Toumadj is chief executive at Mortgage Broker Tools (MBT)