"A mandatory notice period might be difficult for many lenders"
Following calls from mortgage brokers for lenders to provide a minimum notice period on product withdrawals, the Intermediary Mortgage Lenders Association (IMLA) and the Association of Mortgage Intermediaries (AMI) admitted that a mandatory notice period might be difficult for many lenders to comply with, as there could never be a “one size fits all” approach to giving such notice.
Kate Davies (pictured left), executive director at the IMLA, said that while mortgage product withdrawals at very short notice can be frustrating for all concerned, decisions to withdraw products and reprice are “taken only when absolutely necessary.”
“The root cause is the current volatility in the swaps market, combined with the continuing speculation about further rises in Bank of England base rate,” Davies explained.
“In practice, we do not think there could ever be a ‘one size fits all’ approach to giving notice of the withdrawal of a particular product. This is due to different lender funding strategies, which will drive the need for some lenders to move very quickly in order to remain prudent and profitable when there are large and sudden increases to funding costs.”
Even considering that a mandatory minimum notice period might indeed be difficult for lenders, Robert Sinclair (pictured right), chief executive at AMI, said lenders should also think about their broker partners and their current and potential customers by giving as much notice as possible.
“AMI acknowledges the volatile market conditions and the need for lenders to protect their pipelines, margins and profitability,” he stated. “However, sudden product withdrawals could be seen to be indicative of insufficient pipeline monitoring.
“It would be preferable if withdrawal periods could be measured in hours and not minutes, with thought given to when cut-offs are announced, not at weekends or late in the day.”
Sinclair added that it would be helpful if lenders could commit to try to give 24 hours’ notice, with both announcement and deadline falling between 9am to 5pm, from Monday to Friday.
The AMI executive vowed that they would continue to work with the IMLA to see if they can establish some industry guidelines and best practice that all firms can support.
Davies, speaking for IMLA, said the trade body’s members take the issue “very seriously” and “will continue to do their best to give brokers as much notice as is reasonably possible when a product is about to be withdrawn.”
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