The guide comes in light of ongoing interest rate volatility and its consequent impact on swap rates, which has led to temporary product withdrawals and repricing from lenders, and added pressure onto advisers.
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It explains different types of funding used by lenders, as well as how the type and split of funding can impact the individual lender’s ability to respond to interest rate changes.
It looks at how fixed rate mortgages are funded, explains swap rates, why product withdrawal timelines vary by lender, the challenges of a 24-hour minimum withdrawal period and what the next steps should be for lenders and brokers.
The guide aims to be “accessible for anyone in the industry and assumes no prior knowledge” and explanations were written by technical specialists in the lending sector.
Robert Sinclair (pictured), chief executive of AMI, said: “Interest rate volatility is the new normal, and unhappily it is causing a great deal of stress and difficulty for advisers and their clients. In this environment, understanding the rationale behind mortgage pricing and product availability can give brokers valuable insight to help their customers make good decisions.
“That is why we at AMI and IMLA have come together to create this Q&A guide. In addition, we will continue to talk to lenders and other trade bodies about reasonable notice periods for product withdrawal.”
Kate Davies, executive director of IMLA, added: “We hope this guide will clarify the motivations and constraints lenders are operating within, and promote better understanding between lenders and brokers.
“It is essential we evolve as an industry to meet the demands of a shifting financial climate, and to that end, we are calling on all parties to maintain open dialogue.”
