It is very early days but, judging by the direction of travel since Hunt took to the airwaves, that hope is beginning to solidify into more concrete market changes, and it appears there has been some success here.
However, at that very point a number of big, mainstream, residential lenders were sending out communications to advisers announcing some eye-watering increases to their fixed-rate mortgages.
You’ll understand the irony of all this, and you’ll no doubt be wondering how measures designed to induce the opposite, have instead been followed by bigger increases to mortgage pricing, thus resulting in even more worry, stress, and frustration to advisers and clients alike.
Mortgage rates were already climbing
It’s hard to fathom how we have got to this point, and clearly, the government has a major role to play here. However, rates (as we all know) were rising prior to the Kwarteng/Truss ‘intervention’ and not for any reason to do with the costs of funds, but for the vast majority, all to do with service levels (or lack of them) and a strategy which deemed price rises the best option to deal with strong demand.
And here we are again. Just at the point when the cost of funds begins to turn back around, we have a number of lenders upping product rates, not only for new business but more bizarrely for existing customers.
Harsher critics of this approach might be referring to it as ‘The Great Mortgage Swindle’.
How else do you justify an approach whereby your existing borrowers are being asked to pay significantly more for renewing with you? Even when – as we all know – the cost, resource and time required to process a product transfer electronically is significantly less than that required for new business.
Holding on to loyal borrowers
Are we at a point where these lenders don’t want to hold onto their existing borrowers? To increase rates by more for existing borrowers than for new business at this exact point in time seems not only utterly depressing, but absolutely bonkers.
Not forgetting it is a total liberty on the part of the lender and could be said to be sheer profiteering at a time when the likelihood of many borrowers ticking a box for such a product is heightened.
We would like to hear the reasoning behind such a decision. And to do it right now? If they are too busy then, follow the lead of others, and simply stop taking new business in order to get on top of the pipeline.
Don’t bite the hand that has fed you by punishing existing borrowers.
Signs of market stabilising
All anyone has talked about in the last few weeks is the cost of mortgages, the payment shock for borrowers and the problems those that want to purchase are finding in terms of securing mortgages at a price which still makes it viable to buy.
The start of the week presented a hint of light. That rates may not need to rise as fast as we have seen them, and that the markets may be shifting – albeit slightly – and the big fears for rates, particularly over the next 12 months, may not be realised. It perhaps gave lenders a chance to reassess what they have done in the past three weeks and to give serious thought to whether they needed to continue in their most recent direction.
Instead, we were ‘treated’ to this news from some of our bigger lenders, which is particularly galling for those borrowers already with them. It would appear that some can’t help themselves and that, for many mortgage borrowers at the moment, every silver lining comes with an almighty cloud.
Shame on those concerned.
