Some mortgage lenders removed their fixed rate deals for new business yesterday due to a myriad of factors such as the fall of the pound, increase in swap rates and rise to the base rate.
In missives to brokers, lenders said that this was a temporary removal to reprice deals and that new products would be released imminently but did not offer concrete timelines.
Yesterday, brokers said that they expected more lenders to follow suit, as lenders pausing new applications put increased pressure on those remaining.
‘It’s a nightmare today’
Brokers said that lenders withdrawing deals with minimal notice and the widespread reporting by the media had created panic amongst potential borrowers about lenders potentially retracting offers.
Jodi Spreadbury, mortgage and protection adviser at The Mortgage Broker, said: “It’s a complete nightmare today. Clients are worried about lenders retracting offers, so I have spent all morning clarifying that this is not the case. All the mainstream news is not wording it very well.
“There are still plenty of options, but we need some idea from lenders why they are withdrawing whole ranges. What does that achieve?”
Some brokers and broker firms have put on ‘out-of-offices’ or sent out client emails clarifying that if a mortgage offer has been issued or application submitted then the rate has been secured to reassure clients.
It also noted that with rates changing frequently it was vital that customers provided all documents up front so brokers can move quickly to secure deals.
Samantha Bickford, mortgage and equity release specialist at Clarity Wealth, said: “It’s extremely challenging at the moment. I had a client cry with relief yesterday when they heard their lender had removed their fixed rate deals and thought that meant their mortgage would be withdrawn.
“When I told them we had reserved that deal just in time by getting the fully packaged application in they fully cried on the call to me, I have never experienced such an emotional volatile time for this industry.”
Mark Robinson, managing director at Albion Forest Mortgages, said that last time these kind of product withdrawals occurred was when Covid-19 hit.
He noted: “The biggest concern right now is that lenders will retreat from the high LTV markets if we keep seeing predictions of housing market crashes.”
Customers need to act fast
Brokers said that they were encouraging customers to act quickly to secure deals, and to have all documentation required gathered ready to go.
Bickford continued: “It’s difficult as I hate nothing more than pressuring my clients but if they delay the deal they want to apply for will be gone. It’s important to help them understand this but in a non-pushy way.
“I am ensuring as much work is done upfront, all documentation is gathered so once recommendation is made we are ready to apply to lock in that deal immediately.”
Lewis Shaw, founder of Shaw Financial Services, said that it was vital to “keep calm” and to be “upfront and honest” with clients about market volatility.
He added: “We don’t know how this will play out, and we must tell our clients the truth. It will be challenging, and many people could find themselves with mortgage payments they can’t afford. There’s no point in shying away from it; take the bull by the horns and say it as you see it.
“If someone needs to sell up and downsize, tell them, no matter how much they don’t want to hear it. Let’s hope the dust settles quickly with lenders. It’s pointless speculating what rates might be. We deal with the situation as it presents itself—nothing more, nothing less.”
Robinson agreed and said that his current advice to clients was to “not mess around, get all your documents ready asap as rates could go up or get pulled entirely at a moment’s notice”.
Ian Hewett, founder at The Bearded Mortgage Broker, continued: “With regards to the clients, get all the requested documents over to your broker as quickly as you can and, most importantly, in the requested format. This will ensure that your case is loaded correctly and can get reviewed properly with no delays or risk that the rate will rise.
“This is hugely important, one document that is missing or not in a format the lender requires can have a massive impact on the speed of your mortgage.”
Lender communication vital
Hewett said that communication was “key” and that lenders should give “sensible timelines” to allow brokers to secure the “right deal for the client”.
He continued: “Getting an email at 16:30 saying rates are changing tonight at 22:00 is not helpful, some brokers have lives after normal office hours and the impact on them and the client is huge.”
Stuart Powell, managing director at Ocean Mortgages, said that residential mortgage lenders could look to the equity release market.
He explained: “If a lender is withdrawing a deal, they email all brokers the day before to give us 24 hours’ notice. We can then create a key features illustration (KFI) on the lender’s website for our client, which reserves the lower rate.
“If the client decides to proceed with an application, the lender gives us two weeks to complete the application on their system using the reserved KFI. It’s simple, broker and client friendly and much less stressful than residential lenders make the process.”
