Product updates, rate cutting, withdrawals, new launches, and to a lesser extent, criteria shifts and the like have pinged into advisers’ email inboxes with all the regularity of an England batting collapse.
Back in mid-August, Moneyfacts suggested the shelf life of a mortgage product was just 21 days. As we write this, it could well be shorter than that, such is the never-ending cycle of change and the requirement to continually respond to it.
Clearly, when it comes to rates, and the downward pressure placed upon them, this is very good news for borrowers. However, with service standards at many housing market stakeholders, such as lenders, conveyancers and surveyors, not being particularly great, it also tends to mean a significant increase in workload for all.
The point is that three to four weeks ago, market-leading rates looked very different to what they are today.
Securing the best deal
Clients are much more rate-savvy and rate-aware – if they see a better rate has been introduced since they booked their initial one, they’ll want to know from their advisers if they can get the better rate.
And that’s the way it should be. Advisers are also keeping a close eye on their most recent recommendations because, the likelihood is that with completions taking so long, the rate will have dropped and the borrower should be moved.
Indeed, rates are potentially changing three or four times during that period when the mortgage should be moving through to completion.
This being the case, it is odd to hear some lenders grumbling about this process, and then having to change the rate, when they “already booked the money at the previous rate”.
“It’s creating more work for us” comes the refrain, to which we would reply that if the service could be sped up, then completions would be made at the original rates before they were changed, and the new rate was requested.
Some make it sound like it’s the borrower’s or adviser’s fault, when it would be odd for the latter not to want to try to get their client onto the better rate when it becomes available.
The constant chopping and changing of rates makes this a self-perpetuating experience for advisers and borrowers, where the booked rate is not necessarily the one that will be completed on, and where lenders must look at the money that is originally booked at previous rates and wonder why it is not sticking at those rates?
Focus on completion times
The answer will be found in the time it takes to complete, and the lenders’ predilections for constantly swapping rates within that period. We appreciate they are having to react to competitors and what the market is doing, but to then complain about the work involved for them as a result of this approach seems to be dripping in irony.
Rates, particularly at certain loan to values (LTVs), are now as ultra-competitive as they have ever been.
Do lenders need to keep on racing each other to the bottom here or would they not be far better off broadening criteria and opening up the market to those who are genuinely underserved? Rather than focusing on the few that are more that catered for?
We appreciate this has been and still is a busy market, and lenders have needed to work on significant amounts of business throughout the year, but they need to find a service sweet spot so that business completes in time.
They also need to acknowledge that if they change their rates, and a borrower qualifies for a better one, then it is our advisory duty to secure it for them. If that creates extra work for the lender, then so be it.