Speaking on a video debate hosted by Mortgage Solutions, Duncombe said the unstable swap rate environment following the mini Budget was not a recent problem.
While things have changed significantly in the last few weeks since the mini Budget, this is not a problem that has just happened in the last few weeks.
He said coming out of Covid lockdowns, price increases along supply chains leading to rising inflation, followed by the conflict in Ukraine resulted in swap rates going up “really quite quickly”.
Duncombe also said the “very volatile increase in swap rates over the last few months” had made it harder for lenders.
He said lenders were used to swap rate rises of one or two basis points in a week, but this had increased to uplifts of 20 to 30 basis points in a day. Following the budget, this surged to increases of over 100 basis points in a day.
“That just makes our pricing very difficult to forecast. And that’s why you see lenders make such quick changes… because it takes you from being profitable overnight into negative territory,” Duncombe added.
He said lenders either repriced up quickly and significantly or stepped back from the market.
Accord was one of the lenders to suspend business following the mini Budget so it could “work out what the right pricing point was before [it] came back in,” Duncombe explained.
He said it wasn’t about a lack of funding or a desire to lend, but about lending responsibly and at the right price.
Duncombe also said there was a disconnect between the forecasts in swap rates and the base rate, saying the base rate was “almost immaterial” when it came to mortgage pricing. He said while the base rate had increased from 0.1 per cent to 2.25 per cent, over the same time swap rates had risen from 0.5 per cent to six per cent.
He said this was the message which needed to go out to the market to improve understanding.
Nick Morrey, technical director at Coreco, said brokers were finding the time they had to react to product changes difficult and said short notice withdrawals were testing broker and lender relationships to the limit.
Ed Checkley, managing director of Advias, said lenders allowing rates to be reserved was appreciated, as were those who supported broker relationships by forewarning them of changes or looking at cases even after rates had been pulled.
Watch the video [8:27] hosted by Victoria Hartley, contributing editor of Mortgage Solutions, featuring Jeremy Duncombe director of mortgage distribution at Accord Mortgages, Nick Morrey, technical director at Coreco and Ed Checkley, managing director of Advias.
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