the previous evening. In it, OSB said it will take a roughly 170 million pound hit to revenue because customers were refinancing home loans quicker than expected.
Accounting rules force lenders to recognise mortgage revenue evenly over the product’s life, which involves making an assumption about the effective interest rate at the origin. That, in turn, involves predicting how long customers will stay on higher variable-rate tariffs after their fixed-rate deals expire. Central banks’ inflation fight has changed the dynamics here, since rising rates incentivise borrowers to switch more quickly.
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