Brokers are having to work until well into the night at extremely short notice at times to ensure clients are aware of these sudden changes, which are sometimes announced as late as 5pm. This also puts brokers and their clients under pressure to secure products which are set to be withdrawn before deadlines as late as 10pm the same night.
With three BoE base rate changes over the last few months, lenders have frequently adapted their rates, causing headaches across the UK’s brokerages almost every time.
Brokers want to see a standard notice of at least five hours, or have notes sent before midday ahead of evening changes.
Brokers argue that a few hours difference would give them time to do their jobs without having to compromise on their work/family life balance, or calling often already stressed clients at all hours.
Aaron Strutt, product and communications director, Trinity Financial, said: “The industry as a whole hasn’t been used to rate rises and now they’re coming through, the difficulty is that there’s just a lot of them. It boils down to getting your client the cheapest possible deal and if they’re not producing the documents quickly enough then it can be costly to secure the rate. There’s added pressure on the client and broker as there are a lot more time constraints than we’re used to.”
Late nights and nervous borrowers
Greg Cunnington, COO at LDN Finance, said: “The problem we’ve seen is that every good adviser wants to do the best for their clients, but that has meant that some of us are up until 10pm keying up applications.
“From a work/life balance perspective, it’s not great at a time when there’s been a lot of emphasis on mental health and family – suddenly telling people that they’ve got to cancel their private plans and work until very late or their clients are going to be on a higher rate by morning doesn’t lead to positive outcomes for anyone.”
Rob Gill, MD at Altura Mortgage Finance, said: “It’s challenging to say the least, and it makes the borrowers nervous. They’re savvy enough to know the rates are on the up and that they need to move quickly so they don’t want to miss out. The other side is that rates are still very low and borrowers appreciate it – you can tell them after they see the rise on the news that morning and they’ll know that it’s usually still a good rate.
“I try not to get too caught up in the last minute stampede – it’s wise to be pragmatic about it, but it’s not something I would stay up until midnight on. We tend to be able to get a good heads up and it’s good to listen out for whispers before they come out officially and react to that, or let your clients know it’s a possibility. This has been the case on at least two recent occasions.”
Why do lenders do it?
Cunnington said: “I empathise that it’s a difficult balancing act with rate increases.
“If lenders give too much notice then they’re liable to receive too many applications which impact service standards, which isn’t good for anyone. However, there should be an appreciation that clients should always have fair opportunity to secure the rates that they believe are available.”
Gill added: “It’s definitely happened a lot over the last few weeks with all the base rate rises over the last three months. I don’t think this will carry on, but I think the BoE is putting up rates so it has wriggle room to cut them later in the year.”
Strutt is more sympathetic. He said: “Rates are rising, the costs are going up and the lenders are under pressure to make the changes. Whereas before we’d have got more notice, it’s just unfortunate, though they do tend to try to work with brokers.
“The lenders are under pressure to get the rates through and unfortunately it’s making things difficult. They don’t want the rates to rise either.
“The rate changes would usually go down, but now that they’re going up that’s what’s causing the difficulty. You call your clients and submit the deal, get them in – that’s the whole point of being a broker basically!”
Fair warning
Coventry BS stood out to brokers in a good way, however, as it typically gives 48 hours notice for product withdrawals, a principle the society has stuck to even when its ethos could cost them money.
Cunnington said: “It’s really loved by all intermediaries. While 48 hours is perfect for us, it would be best if every notice had to be done by midday that day then it gives everybody five hours to react, which is tight but fair.”
Jonathan Stinton, head of intermediary relationships at Coventry for intermediaries, said: “Top of our list of pledges to brokers is the commitment to give at least 48 hours’ notice of product withdrawals. It’s been in place for around 15 years and it’s there because our intermediary partners told us then and continue to tell us how frustrating it can be to see products disappear at the 11th hour.
“We pride ourselves on our transparency and by having some of the best service levels in the industry. Making sure we give fair warning when one of our products will be withdrawn makes it easier for brokers and gives their clients a positive experience.”
