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Product withdrawals ‘re-run of last September’ though worst may be over ‒ analysis
The swathe of product withdrawals and repricing over the last week have left brokers feeling a sense of deja vu, advisers have said, though there is some optimism that further changes are unlikely until there is more ‘gloomy’ economic data.
Around a dozen lenders have pulled selected mortgage products within the last week or so, while some have pulled their entire fixed rate range. The level of choice has also dropped noticeably, with the number of mortgages on the market dropping from 5,385 at the start of last week to 5,012, according to data from Moneyfacts.
Brokers said that the situation has been a retread of what happened last year following the mini-Budget, with a desperate race against time to get deals over the line in time. However, there was also strong praise for the approach of lenders like Coventry Building Society towards product withdrawals.
We’ve been here before
The situation is “shaping up to be a re-run of last September”, suggested Lewis Shaw, owner of Riverside Mortgages.
He noted, following the disastrous Truss-Kwarteng mini-budget, brokers were explaining to clients that all documentation needed to be provided upfront in the correct format, so they could react as lenders changed their product ranges.
Shaw added: “The number of people that missed out on better rates because they didn’t get their documentation in order was staggering. We’re back to the same scenario. Most brokers have only just recovered from the last time this happened, and no one wants a re-run of that.”
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The feeling of deja vu was also highlighted by Graham Cox, founder of SelfEmployedMortgageHub.com, who said “it was like Liz Truss all over again”.
“Swap rates are now edging down slightly but remain very high. Not good news for a government swimming in debt,” he added.
Race against time
Paul Neal argued that getting a good deal for a client is hard enough, let alone trying to do it with just an hour’s notice that a mortgage deal for a client is about to disappear and be replaced with something 0.5 percentage points higher.
“It has meant us brokers have been rushing over the weekend to get applications in to try and secure our clients the best deals,” he added.
Is the worst over?
Justin Moy, managing director at EHF Mortgages, said that given the majority of mortgage lenders adapting their rates on offer, he did not expect many more changes in the coming days unless further data is released which “makes the gloom a bit darker”.
He said that it has been the specialist lenders, who are most exposed to swap rate fluctuations, who pull their rates most swiftly while the high street lenders tend to take a bit more time.
BTL has hit a roadblock
Rohit Kohli, operations director at The Mortgage Shop, agreed with the fact that so many lenders have already reacted should mean fewer unexpected changes until the next Bank of England meeting.
He noted that the buy-to-let market in particular has “hit a bit of a roadblock as a result”, having looked like it was on the up.
“This has caught a lot of clients off guard, and I’ve been chatting to some who are thinking of putting their property hunt on hold for a bit over the weekend,” he continued.
“I’ve also noticed that people who were pretty relaxed about remortgaging are starting to feel the heat and are trying to lock in their rates ASAP. So, it looks like we’re in for a busy couple of weeks.”
How can we trust lenders?
Those in charge of lenders lack “the knack to not only make sound choices, but also effectively communicate them to the wider market”, leaving brokers to try to work out where they stand, argued Adam Smith, founder of Alfa Mortgages.
He continued: “Trust is at an all-time low right now. How can we trust any lenders when they can’t even trust themselves? It’s like watching a game of double-cross, where no one knows who’s got the winning hand.”
Following the Coventry example
There was wide praise for Coventry Building Society for its approach in providing at least 48 hours notice of withdrawals.
Moy noted that the policy ‒ along with that of Platform ‒ made it “easier to stomach from a processing perspective”.
Shaw added: “If lenders could follow suit, that would be perfect as that way, we, as brokers, can prioritise cases and manage diaries better rather than having to drop everything at the last moment. It’s mentally exhausting for clients, us and everyone else involved in the process.”