Speaking at the Buy To Let Market Forum in Cardiff earlier this week, Mortgages for Business CEO David Whittaker noted that lender product retention and transfer strategies were increasingly important as background portfolio requirements continue to change.
Whittaker highlighted that if a lender did not have some sort of a product retention or transfer strategy then at the end the fixed-term period, if the portfolio no longer fitted the “new norm”, it may be impossible to refinance the loan.
“You may have created a mortgage prisoner,” he warned.
“They may end up going on to that lender’s back book, which will inevitably end-up being at a rate of Libor plus 4.5% or whatever figure is appropriate.”
Lenders need to step up
Whittaker also used the opportunity to encourage those lenders without a retention strategy to get themselves in order.
“I really think it’s important that the one or two lenders that don’t yet have a solid product retention or transfer strategy need to step up and produce something,” he continued.
“We can talk about commission endlessly and what they should or shouldn’t be paying, but if they don’t have a strategy and you inadvertently put your client into the mortgage prisoner position that’s something you need to think carefully about.”
After a show of hands by the audience, Whittaker also noted that “we’re starting to see some numbers coming through of borrowers being stuck.”