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Brokers criticise lenders for timing of rate reductions

Journalist: Justin Moy, Contributing Editor

ended 02. January 2024

Brokers have questioned whether lenders timing their rate reductions to go live a day or two after key cut-off dates for Product Transfers, preventing borrowers from getting access to cheaper deals and monthly payments, is in the spirit of Consumer Duty.

According to Justin Moy of Chelmsford-based broker, EHF Mortgages, Halifax, for example, have announced product transfer rate reductions starting the first (working) day of every month since August, putting the rates out of reach of those who had to take a new deal by the end of the preceding month unless they opt to pay a high SVR rate for a month to secure them (potentially wiping out any savings).

Brokers shared their views with free UK news agency, Newspage, on whether this practice of holding back price reductions until such time as borrowers cannot take advantage of them is in the spirit of Consumer Duty. One said it is “infuriating”, another “bang out of order”, a third “plain wrong” and a fourth “price-gouging”. Their views are below.

11 responses from the Newspage community

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Ken JamesVerified
Director at Contractor Mortgage Services
This is a bang out-of-order practice that has cost clients thousands. Having a client on a rate that has gone live on the 28th of the month only to have that same lender bring new rates to the table the very next day that are lower has been the bane of broker's businesses for a long time. The only way for the client to benefit from the new deal at the lower rate is to suffer the high standard variable rate for a month, locking in the deal to start at the beginning of the following month. This then gives the lender an increased payment and the borrower suffers. Given that this announcement of the new rates is so late usually on the eve of the existing rate being locked in, there is little chance for borrowers to even have a moment to consider their options. This a bad practice that needs to be stamped out, especially in this era of Consumer Duty and treating customers fairly.
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Justin MoyVerified
Managing Director at EHF Mortgages
There is definitely a familiar pattern here, with many mainstream lenders continually cutting rates a day or two after key cut-off dates for Product Transfers. Halifax seems to be a constant offender, with rate reductions starting on the 1st of every month, which means they cannot be made available to those borrowers who need to decide by the end of the preceding month. With cuts of up to 0.92% announced today by Halifax for their Product Transfer range, it leaves a bitter taste in the mouths of everyone and can cost borrowers significantly over the next two or five years.
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Craig FishVerified
Director at Lodestone Mortgages
Lenders know exactly what they are doing, and it’s plain wrong. All the economic signs are pointing to lower rates and for lenders to leave reductions until it’s too late for clients to benefit is not in the spirit of Consumer Duty and is quite clearly profiteering. What we need is some real competition with remortgage rates. This should ensure that lenders always price competitively.
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Samuel GeeVerified
Director at Manning Gee Investments Limited
Having completed a product transfer with Halifax for a client on 27th December, who was desperate not to go onto the SVR, I expect the reason they are hiding new product transfers which "are now bespoke to your client" is so that no client will actually know by how much they have been disadvantaged. I understand it's business, and that's how many companies operate, but believe this is likely to push the boundaries of Consumer Duty, particularly the price and value outcome, as clearly many who have recently confirmed deals are disadvantaged by the timing of today's rate reduction announcement. In my client's case, I expect it will have cost them around £6,000 in extra interest.
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Charles Breen0
Founder at C B
This practice is price gouging, plain and simple. Other industries get criticised for such predatory actions, so why shouldn't we call out banks for the same actions? They all like to boast about how they have embraced Consumer Duty and care about their customers but their actions speak a lot louder than their words. They forget that they have a duty to their customers and still owe the British public for bailing them out when they needed it the most. The FCA is talking a lot about fair pricing, but these actions do not live up to fair pricing. Timing your new rates to be launched repeatedly just as the majority of people complete at a higher rate is not fair pricing nor is it in the best interest of their customers.
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Peter Stokes0
Director of Mortgages at Davidson Deem
For some time now we have known that Halifax have employed this tactic. Although we try and reserve a rate six months before the current rate end date, with continually falling rates, it is not uncommon to want to change the rate even a few days before the transfer date. However, until recently, Halifax's product transfer rates have been so uncompetitive that a remortgage was the more cost-effective solution. Now these products look much more competitive, the chances are renewing with Halifax could be the best option, meaning this becomes a big issue again. Halifax have almost exclusively always revised PT rates at the start of the month, but in recent years there have been some exceptions to this rule, meaning they can do it, and therefore, in my opinion, this does go against the spirit of Consumer Duty.
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Laura Bairstow0
Founder at The Mortgage Masters
As brokers, we are constantly working in the best interests of our clients. We often find ourselves resubmitting Product Transfer requests 3 or 4 times as rates reduce to get the best possible product deals for our customers, with absolutely no financial benefit ourselves. Therefore, seeing the banks treat their own customers this way and preventing them from being able to access their best rates is infuriating.
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Mike StatonVerified
Director at Staton Mortgages
It's a kick in the nether regions for borrowers but business is business. Halifax's rules regarding dates are crystal clear, and most clients can find cheaper deals moving away from Halifax. I didn't do many Halifax PTs over the last 2 months due to their higher rates compared to the competition. Funnily enough, the majority of mortgages that I did for existing Halifax clients are still on cheaper rates with their new lenders than they would be on a Halifax new deal.
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Darryl DhofferVerified
Founder at The Mortgage Geezer
This whole situation is slippier than someone selling snake oil on Oxford Street. Consumer Duty says lenders have to treat brokers and consumers fair and square, instead of as numbers on a spreadsheet, so is this about holding back on business or stitching up consumers? Well to me it smells a bit off. Lenders could easily offer new deals a few days earlier, I'm sure. I can't believe all lenders decide on the 1st of every month what the new deal will be for Product Transfers. Not all lenders were playing that game when rates were increasing if you recall. In fairness to Halifax, they did hold rates as long as they could for those months.
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James Bull0
Mortgage Broker at JB Mortgages
Halifax sent out a communication in the middle of last year advising that their Product Transfer rates would no longer update monthly and instead would be tweaked in line with market conditions. This was a welcome update. However, in practice, in the following months it seems that nothing has changed. Halifax's product transfer rates have continued to change on the 1st of the month as they always have. This has been particularly frustrating in the current environment where rates appear to have peaked and the new deals coming out are lower.
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James Miles0
Director - Mortgage Adviser at The Mortgage Quarter
How convenient. I couldn't possibly imagine lenders would be pricing in this way to gain an advantage. An honorary mention to Nationwide who have been reducing the rates for existing borrowers after their 20th of the month cut-off date so they cannot benefit. It's poor from lenders to do this but who is holding them responsible? In a market where we need confidence, this is only going to leave a sour taste in borrowers' mouths, and ultimately impact economic recovery in the UK.