Press enquiry: mortgage comment

We’ve seen smaller lenders withdraw from the market fairly regularly in recent months as they struggle to cope with rising interest rates. The shift, however, to larger lenders such as Virgin Money and Halifax withdrawing rates is significant and a huge concern to mortgage borrowers. With borrowers already set to be hit by significantly higher mortgage costs, the reduction in choice caused by larger lenders withdrawing from the market will only make the situation worse. The starting point for any mortgage adviser in the current environment is "be prepared". Work closely with your adviser to ensure you're ready to apply asap once they find the right deal for you. A mortgage rate is typically secured once an application has been submitted so, in an environment where rates are being withdrawn with little or no notice, being ready to move quickly is crucial.

Due to the current uncertainty, I would look to review your mortgage, regardless on when the fixed rate is due to expire. It could be prudent to look at paying an exit fee to get a fixed rate now, rather than wait where the rates could be much higher. We had a client pay an £18,000 exit fee today to lock in a new 5 year fixed. We have seen some clients with large mortgages wait a few weeks to consider and now come back to see the extra cost is the equivalent of getting a Lamborghini on lease. However, the good news is that for those who are based outside of the UK, it is a great time to buy as they are effectively getting a discount with the sterling rate.

The key here is to seek independent mortgage advice, whilst for many, there is real need to act, there is no need to panic. The fluid market may sometimes mean that smaller nieche lenders lenders may become more competative and thinking outside the box here is key. Lenders have only pulled rates to reprice them and this will no doubt be done over the coming days.

The best advice is to talk to a broker as early as possible. With rates undoubtedly higher than they were, some consumers just won't be able to afford their new mortgage repayments. We'd rather clients be in a position that if they do have to downsize and regroup, that they have time to sell their property for the best price rather than sell in hurry for a steep discount. That being said, even if consumers want to stay put let's look at securing rates early, certainly 6 months out from a product end date.

• Don’t rush a decision – We have enjoyed a period of ultra-low rates and that has now come to an end and you are faced with the same situation as everyone else. • The future is not known – Exiting an existing deal early to try and “bag a bargain” will generally come at a cost of Early Settlement Charges and a higher rate today. We simply don’t know if the increased costs will work out to your advantage over the longer term. It could be an expensive gamble • Buy for a first time – If you are looking to buy, perhaps you might decide to wait and see what unfolds over the next six months, if there is a deterioration of financial markets that may lead to property deflation. If you are entering the market you might see greater value. Of course, it may not • Act now – If you are looking to sell, perhaps it is time to accept an offer and close the deal. Its only a profit when its in your pocket • Planning a move – Can you add longer term value to your home and invest the money that you would have spent on moving into future proofing your home, carry out retrofitting of green energy and other efficiencies, extend or renovate • Worried – Speak to an adviser, if you are concerned about your financial position look to consolidate it and plan ahead

If you are looking to get your mortgage sorted now, do not delay the process and get the required admin over to your broker in the requested format. Any issues could delay the process, which may cause a rejection and then you will have to re-apply with potentially a significantly higher rate. Lenders are pulling deals, mainly ones that have a fee to pay in advance or add to the mortgage amount. There are lots of changes coming so do not delay and remember, we get very little notice of rates changing or deals being pulled. It is as frustrating for us as it is for borrowers. Just make sure that the latest rate is affordable to you and do not panic.

Preparation is key and understanding the right time to apply. Lenders are still lending so do not panic to ensure you make any hastily decisions. It’s a must that you talk to a broker 6 months prior to your existing mortgage deal expiring so you can lock in a deal in light of further rate rises. You must be comfortable understanding your budget and don’t be afraid to review your term to ease your payments whilst we ride out the rollercoaster at the moment.

For a remortgage my advice would be to speak with a mortgage adviser as soon as possible. If you are within 6 months of your deal ending they will likely recommend submitting an application now with a review of locking in a new rate for you. If you are outside that 6 months they will be able to identify some actions you can put in place to help with future interest rises such as overpaying into your mortgage or restructuring the mortgage. The adviser can then put a plan in place for you leading up to your current deal ending. For first time buyers and movers then budget planning is key. Work with your adviser to put together a budget making sure that it leaves some room for other areas to increase such as utility bills etc.

Now more than ever highlights the need to use a professional in the industry to sort out your mortgage. Huge call wait times and weeks to get an appointment with a bank to arrange a mortgage aren't going to cut it given how fast the goalposts are being moved in the industry. Anyone with a mortgage due for renewal in the next six months needs to be taking action now, and those that have a mortgage due in the 6-12 months should really seek advice still about what the future holds for them and their mortgage.

If you really need to buy now, have at least 15% deposit, can afford the mortgage, and are happy to fix for at least 5 years, I think it's fine to buy now. Otherwise I think it would be prudent to stay out the market. The great danger is that house prices fall over the next couple of years by 20%+. Anyone buying now with a small deposit is in danger of being stuck in negative equity unless they fix for 5 - 10 years. For anyone coming to the end of a fixed rate mortgage, speak to your mortgage advisor now. Don't delay, because you can lock-in a rate up to 6 months before your current fixed deal finishes. There's every chance mortgage rates are going to increase by 2-3% over the next year, so locking-in early could make all the difference.

I am seeing more customers opting or interested in paying an early redemption charge to switch to new deals, this now seems to be less of a concern to clients as they see rates skyrocketing in the next few quarters that it will actually pay off, in the long run, to pay a few thousand pounds in early repayment charges in order to lock in a lower rate now than have to find a rate in 6 months’ time. It's hard to say when this should and should not be applied as unfortunately no one has a crystal ball that tells them the future of rate rises so it's all rather speculative. If I have a client all I can tell them is to do their research on the rates and economy and direct them to our in-house economist. If they think the rates will rise I ask them their predicted worst-case scenario rate and we make a chart calculating the cost of rates then VS the cost of rates now + their ERC’s and see which option works out cheaper. After reviewing ERC’s, paying a penalty to get a new 5-year deal locked in now could be beneficial vs having to refinance in a year or 2 I can only see more and more clients wanting to lock in for a longer fixed rate now so I can definitely see this becoming more common as rates continue to rise following Thursdays announcement.

The overnight news highlighting that some lenders have effectively closed their doors to new business has spooked and panicked clients and lenders in equal measure. However the continued withdrawal of rates will in part be due to lenders not wanting or being able to service the resulting demand, choosing to 'wait and see' before repricing or repricing significantly high enough to outprice themselves whilst things (hopefully) settle. Don't make a knee jerk decision without weighing up all your options, it depends on so many factors as to whether it's personally the right decision for you to buy now or remortgage and pay a hefty early repayment charge.