Dealing with rapid changes from lenders, what are brokers making of the market madness?
In recent weeks, the mortgage industry has witnessed a host of lenders pulling mortgage products with little notice, amid the looming prospect of another base rate hike.
Unsurprisingly, this is causing frustration for both brokers and consumers, who are having to navigate an increasingly complex market.
Michelle Lawson (pictured), director and mortgage and protection adviser at Lawson Financial, said she has had many situations where customers have had to make rushed decisions, or have had to take a higher rate.
Withdrawal of products – problems for brokers
Lawson said the problem with short-notice withdrawals is it puts immense pressure on brokers to submit an application accurately, and also to provide the appropriate documentation in a rushed period of time.
Lawson said brokers are not just dealing with one application at any one time - she has had situations in the past few weeks where multiple lenders were on a short-term withdrawal notice, which has created complications on which cases to prioritise.
James Vince, managing director at Castle View Finance, also highlighted the world of uncertainty in the market and the problems it has been causing. He said the pain is felt by clients that have already formed a budget for a purchase, or those reaching the conclusion of their current product and who are now facing a significant rate increase.
Similarly, Steven Morris, advising director at Advantage Financial Solutions, said lenders are repricing with little to no notice, most likely because inflationary reports in the US have indicated inflation will not be transitory and that it may well hang around for a while.
“If you look at the pricing of two-year fixes versus five-year fixes, prior there was perhaps a clue that lenders assumed inflation and rates would normalise in two years’ time,” Morris said.
However, he said perspectives have now shifted, meaning lenders have had to change tack sharply. In turn, so have brokers, which Morris said has meant getting deals over the line the old-fashioned way - panicking and keying applications as quickly as humanly possible before deadlines.
Morris added that he has had multiple clients come out of the woodwork who were ‘waiting’ for rates to reduce, now desperate to go ahead given the new outlook.
“I also cannot understand some brokers online saying they do not believe the negative media’ whilst watching rates go up by nearly 1%; maybe this is all a temporary bump, but it is certainly not positive,” he added.
Relentless hikes
Aaron Strutt, product and communications director at Trinity Financial, said the scale of rate hikes has been relentless over the last few weeks. “After getting through the pandemic and the mini budget, most brokers really were not expecting we would have to deal with this mess again,” he said.
“Confidence is being sapped from the property and mortgage markets, not to mention the wider economy; we need a period of financial stability soon.”
Scott Aitken, director and mortgage and protection broker at Aitken Financial Services, said he has no issue with lenders pulling products or amending rates to keep up with market conditions, however, he believes there needs to be a mandatory minimum notice period.
“If Coventry Building Society can give us 48 hours, why can other high-street banks barely manage one hour,” questioned Aitken.
Aitken said you would think that the incredibly short notice some lenders are providing cannot meet the products and services requirements of Consumer Duty.
“It certainly will not get them goodwill from consumers or intermediaries, as it has resulted in several late nights chasing clients for documents in order to get cases over the line and to secure a rate,” he added.
What is your view on lenders increasingly withdrawing mortgage products? Let us know in the comment section below.
