Lender product withdrawals. Again

Hysteria in the national press surrounding lender withdrawals on Monday and Tuesday were frankly misleading for consumers. This type of thing has been happening practically every day for the past six months and the sensationalism is enough for people to put 2 and 2 together and come up with 6%. I had some vulnerable clients yesterday who made a horrible mistake. They were about to panic-buy an overpriced product transfer but engaged with me about trying to reduce their outgoings. It turned out they had a high-rate second charge mortgage that they had taken out to fund some IVF. I suggested they could consolidate this and it would save them £150pm without extending the term. They calmed down during our chat and booked back in for another appointment, which they cancelled an hour later after, you guessed it, reading the Mail Online story about rates rising to 6% and locking into the product transfer on the app, thus in the process opting for the non-advised option with no consumer protection. Mortgage brokers need to prepare to be very busy. Our clients need advice more than ever but journalists need to use their media-voices wisely. Be part of the solution not the problem, we don't want to talk ourselves into a wholly avoidable situation. The lenders are well-funded and want to lend and the consumer demand for our service is high.

We are seeing fixed rates pulled right across most of our buy-to-let and commercial mortgage lenders. We are also being given very short deadlines to push through any applications that have had an "Agreement In Principle", some as little as 24 hours to submit a full application and secure the rate. At this point in time it's fair to say rates are 'soaring', which means a large increase in interest payments for landlords and businesses going forward.

With the uncertainty in the mortgage market caused by the sterling crisis we are seeing lenders withdraw products at a gathering pace. All this gives a high level of anxiety to the consumer about what the future of rates has in store. Borrowers are starting to consider whether they should sit tight on their current product or move away onto another mortgage hedging against what the future may hold as rates continue their upwards momentum. Add into this the impact of the cost of living crisis the future is really looking tough for borrowers.

It's like the government are conducting a 12 year long insane experiment on how best to torpedo the British economy. Austerity, Brexit and whatever the heck we call this now.

The Equity Release market, although growing rapidly, is also experiencing a sudden upturn in interest rates. Over the past three months, the lowest interest rate on offer in the market has increased from just over 3% to nearly 6%, with some predicting that there will be no interest rates available under 6% within a month. Interest rates have been steadily increasing over the last 12 months, however with the growth of ER applications this year, no lender wants to have the lowest rate on the market. This is because as soon as a lender becomes the cheapest on the market, most brokers will advise clients to choose this lender. The consequent issues this causes to the lenders customer service levels means the lenders quickly pull their low rates and launch increased interest rates. As there are only 10 ER lenders, the leapfrogging effect drives up interest rates. The problem is worse with equity release as the lenders' lending policies on mainstream property are very similar. Consequently, with so few lenders the impact of interest rate increases has a far bigger impact on clients than the residential lender market where there are over 100 lenders.

Digital Mortgages are pulling all their rates with immediate effect. The email was sent at 12pm stating that they have stopped with no notice.

Lenders are withdrawing products like crazy at the moment and with less and less notice each day. One that really stuck out to me was Fleet Mortgages who have advised today at 12:30 they will be temporarily withdrawing all Fixed Rate products due to highly volatile market conditions. And that to secure their rates Applications need to be submit by 8pm tonight, giving us only an 8 hour window. I understand why are withdrawing the rates and appreciate them giving us notice but 8 hours isn’t long at all it just shows how volatile the market is right now. I am sure they will not be the only lender to do this either. They have further announced they will only relaunch a full product range once the market has stabilised.