Mortgage industry reacts to comments regarding lenders' SVRs
Last week, Martin Lewis, founder of MoneySavingExpert, said to millions on prime-time TV that they should stay on their standard variable (SVR) rate when their fixed rate period ends and wait for rates to come down.
However, does the mortgage industry agree?
Mortgage industry reaction
Some have suggested Lewis made these comments because his assessment of the economy is that it is past the peak of the problem.
Lewis Shaw (pictured), founder and mortgage expert at Shaw Financial Services, believes that it was irresponsible for him to say homeowners should remain on the SVR as he cannot predict the market and is not authorised to give advice.
“He should stay in his lane because he does not know better,” Shaw said. “Also, the TV rules should do more to ensure there are huge disclaimers which outline that he is not qualified to make recommendations or give advice, and that you should always consult a regulated mortgage adviser.”
Gaurav Shukla, sales manager at home me was in agreement with Shaw that Lewis should not be giving advice.
“He has a very large following and to tell them to sit and wait on an SVR is wrong,” he added. “Advice should be given individually as it is determined by someone’s circumstances and not generally.”
Shukla believes the advice could end up costing British homeowners hundreds, or potentially thousands, more.
“People should seek out expert advice from a qualified mortgage broker, and not listen to anyone else,” he said.
Read more: What are brokers expecting over the next 12 months?
Call for action
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions, also believes that what Lewis said was wrong and said that the Financial Conduct Authority (FCA) should take action against him. Mistry agreed with previous brokers that every borrower’s circumstances and risk appetite is different – therefore, he noted, generalised advice does not help anyone.
“You cannot paint the same picture for everyone. It is the media, like himself, that are making brokers’ jobs more difficult, and causing more anxiety and stress for borrowers,” he added.
Jamie Lennox, director at Dimora Mortgages, outlined that, for many, Lewis is a messiah of the financial world. However, he noted that he is walking a very fine line of advising on a subject that he is not qualified to provide advice on.
“Outlandish statements like this can be extremely dangerous if people take his word as gospel, as financial advice is not a one-size-fits-all approach and could leave some households in real financial difficulty,” he said.
Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial, outlined that most economists think rates will peak much later next year and could go as much as 3% higher than they are now.
“Once they reach that level, they will take a while to start falling. Lewis does not have the same type of client as I do if he thinks they can withstand that kind of shock,” he added.
Read more: Housing market crash – what should brokers do?
Opposite is true
According to Craig Fish, founder and director at Lodestone Mortgages & Protection, the last thing a borrower should do is stay on an SVR right now.
“If a borrower wants to buy some time to see what will happen to rates, then I recommend they opt for a tracker with no early redemption penalty,” he added.
Fish outlined that when a borrower can access a tracker for around 3%, then he believes it is a no-brainer to switch.
“He has obviously got a top-of-the-range crystal ball to be making flippant statements like he did on Tuesday night,” Fish said. “Lewis is a great advocate for consumer fairness, but seriously, stick to your job and let the professionals do theirs. You have to fully assess a person’s needs before advising on anything. He should know better.”
Rhys Schofield, managing director at Peak Money also believes that this advice should not have been given.
“If someone does want to sit and wait and see, how is staying on a SVR better than a tracker that may be half the rate and carry no early redemption charges?” he questioned.
