At this time of year as we head into Q4, we would usually expect to see lenders re-pricing depending on whether they have hit their lending quotas. We saw a clear theme during this time last year where lenders which had already hit their volume targets started to scale back, while those that still had a little way to go continued to price competitively, but there wasn’t much in it.
This year the MCD is distorting this view.
Much depends on how much work the lender still has to do to adapt their systems to make them MCD-ready. Some lenders have already been working on this for months and now just need to make a few tweaks meaning they are very much continuing business as usual. Others still have some significant IT changes to make, pulling people away from their day jobs and onto this project to get it completed in time. Lenders in this situation may have to scale back their mortgage products, making them less competitive as resource is diverted to process and systems changes.
This also appears to be influencing the decision of when lenders will be introducing the European Standardised Information Sheet (ESIS) and which lenders are going with the Key Facts Illustration plus (KFI plus). While it is something of a generalisation, it appears as if newer lenders with newer systems are preparing to introduce the ESIS a lot earlier than the larger lenders with legacy systems which are more likely to move to the KFI plus to give them more time. However, I am sure there may be a few surprise exceptions to this generalisation.
Over the coming months, brokers will need to be prepared to explain either a KFI, KFI plus or an ESIS document to their clients.