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Upping the notice period when product pricing shifts – Carrasco

by: Jo Carrasco, business partnerships director at Stonebridge
  • 21/03/2022
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Upping the notice period when product pricing shifts – Carrasco
We recently hosted a meeting with a selection of Stonebridge’s appointed representatives (ARs) and what struck me during the event was the high degree of confidence which came across throughout.

This wasn’t surprising in itself because I’m fully aware of the quality and robustness of the propositions represented, but given some of the mood music being played around the property market at present, particularly in terms of rising rates and the like, it was heartening to hear such positivity.

Essentially, these firms are incredibly positive about the mortgage market and what they intend to achieve this year. The suggestion was that January had started off relatively slowly for some, but as the weeks have passed, they have been dealing with an increasing level of enquiries which are now turning into applications and completions.

As you might expect, remortgage activity was tending to drive that business, but that’s not to say purchasing isn’t also solid. Evidently, supply remains the biggest issue here but the common sentiment focused on the homes that are coming to market selling in double-quick time.

Purchase demand still prevalent 

Perhaps this shows most clearly how the purchase demand that drove our market in 2021 hasn’t really gone away, and that even without any sort of stamp duty incentive – unless you’re a first-time buyer – this is still a market in which people want to buy and move.

Supply levels will of course determine just how much business is written, but it’s also true to say that rates, specifically rate movements, are likely to drive further remortgage activity. Especially given the direction of travel here is upwards.

At present, we are in a changeable situation with regards to rates. Historically, of course, we’re still at incredibly low levels. This is good news for the borrower as is the ultra-competitive market we have, the lending targets that have to be hit throughout the year and the anticipation that due to this, we may not see full rate increases being translated into product pricing.

Rising rate opportunities 

Upward rate movements can be used by advisers in terms of marketing activity to existing borrowers, particularly those most impacted by rises such as standard variable rate and tracker borrowers, and those who might be coming to the end of special rates.

In that sense, rate rises – bank base rate (BBR) or swaps – might not be the harbinger of doom some are making them out to be.

Of course, rate rises do often mean rate changes at a lender level. There were certain frustrations expressed at our forum, notably around the short notice periods some lenders are providing when changing rates and pulling products.

On that matter, we appreciate that BBR and swap rates do change and lenders have to react quickly, especially in certain areas where no lender wants to be the last one standing and inundated with business it can’t service.

Rate changes are part of the mortgage ‘game’ and it was clear from our adviser discussion that there are still plenty of opportunities to be secured from a rising environment, however long this might last.

Pricing shifts all the time, but advisers would certainly like to be forewarned and therefore forearmed as much as possible when lenders do make their moves, and they have to accept their own responsibility for managing client expectations in that regard.

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