What’s that saying about ‘may you live in interesting times?’
We have had that in spades in the mortgage market over the last few days and, judging by the ongoing reaction from many lenders within our industry, this is going to continue for some time to come.
Or at least until the markets feel like someone has got a much firmer grip on the UK economy tiller?
Life comes at you fast sometimes, and certainly since the ‘Mini Budget’, life has rocketed on at some pace resulting in the raft of changes advisers – and their clients – are having to deal with.
I have a huge amount of sympathy for both at the moment, because this is not a situation of their making and yet they are the ones having to try and find a solution in this somewhat unnerving environment.
For what it’s worth, I wanted to spell out Fleet Mortgages’ position: where we are currently at, why we are here, and what is our short-term view of our next move?
As a start, you will have read in this very publication – good work Ryan – that we have communicated with brokers to let them know we’ve temporarily removed our fixed-rate products, and will just continue with our tracker rates for the time being.
It’s clearly not a decision we ever wanted to make but, we have to give the markets a few days – at the least – to see how the sand settles, and we also have to respond to what our peer group has been doing in the buy-to-let space.
This is, I hope you know, nothing to do with our lending capacity – we had worked hard through the summer to get our service down to much more efficient levels and we had launched new products, specifically a return to 65% LTV and a Green offering, in order to bring in business.
Our appetite to lend is perhaps as strong as it has ever been, but as you’ll know, there are events taking place beyond our control, and the impact they are having on the mortgage market is clearly not what we would wish to see.
I read recently that this feels a little like the start of Covid and lockdown in that everything has changed, in a very short space of time. I recognise the sentiment but hope, and believe, that we will not be waiting a number of months for a return to full lending. Instead – as I write – we are envisaging the launch of a full new product range next week.
As you will know we are not reliant on the capital markets for our funding, but we certainly have to lend within the current market and alongside many lenders who are. Hence, our decision to withdraw our fixes with the full intention of bringing these back to market quickly, albeit – as you would anticipate – with perhaps different pricing.
Price is of course high on the minds of many advisers/borrowers right now, particularly those who have deals about to mature and whose last mortgages were arranged in a rather (much) lower-rate environment.
I had thought – prior to last week – that we could maintain our previous pricing for some time and that the position where lenders felt the need to jump over each other on price in order to deal with demand, was hopefully coming to an end. The reaction to the ‘Mini Budget’ however has been anything but ‘Mini’ and has effectively poured fuel on the fire, at the very point when we might have thought we were getting the flames under control.
To say that needs to be addressed immediately seems obvious but we appear to have a Government and a Bank of England pulling in opposite directions, and it is advisers and their clients who are feeling the brunt of that tug of war. It looks certain that certainly BBR will be increased again shortly, and the Government needs to calm the markets by spelling out exactly how it intends to pay for the borrowing it announced last week.
We hope common-sense begins to prevail but recognise – giving recent history – that it may not. I’m aware that buy-to-let business may well have taken a back seat for many advisers over recent days as they prioritise calming and finding solutions for panicked residential borrowers, however be aware that we remain here to support you and your landlord clients, and we aim to be back to market with a full product range as soon as possible.
In the meantime, I wish you the very best in this somewhat crazy market and hopefully those responsible for putting us all in this situation will be able to find a way to take us out of it very quickly.
Steve Cox is chief commercial officer at Fleet Mortgages