Yesterday marked a trying day for the UK mortgage industry as banks and building societies continued to withdraw and increase rates at sometimes short notice.
Described as “horrendous” by one broker, this trend is leaving both clients and brokers facing an unpredictable landscape.
Steven Morris, advising director at Advantage Financial Solutions LTD, said: “Yesterday was quite simply horrendous.
“We had rate withdrawals and rate increases across the board. Some increases with high street lenders were as high as 1.57%. Some lenders paused lending altogether for a period. Withdrawal deadlines of just a few hours were given.
“My advice to customers right now is don’t even bother getting mortgage advice unless you are prepared to apply within a couple of hours.
“Send your broker documents ASAP and up-front if possible or you don’t even stand a chance of getting a deal before it’s withdrawn.
“Also be kind to your broker, as they have a zillion other clients in the same position as you and with lenders giving just a few hours’ notice of products being withdrawn, are left having to choose which client to ‘save’.
“Being a mortgage broker right now is like trying to stop the tide from coming in armed with a mop. Pointless.”
Justin Moy, managing director at EHF Mortgages, added: “It gets to the point that it is impossible to help anyone. You simply spend your days warning clients that rates are temporary at best, and from about 1pm you worry about the emails that hit your inbox.
“Don’t have a holiday, and certainly don’t have a client meeting in the afternoon at the moment. No lender wants to attract all of the business due to rates, we get that 100%, so the domino effect of mortgage rate withdrawals by lenders is inevitable.
“But in a world of providing professional, qualified and holistic advice, for the most important purchase in your life, this current environment of nearly hourly rate changes, flies 100% in the opposite direction.”
Further reaction
Lewis Shaw, founder & mortgage expert at Shaw Financial Services:
“The past few months have been difficult, but we’ve hit top gear in the past week, culminating on Monday with swathes of deals pulled and mortgages repriced upwards. I spoke to one broker who said they’re getting anxious opening their email in the morning, and I understand what they meant.
“The worry is this could get worse before it gets better. Yesterday, short-term gilt yields spiked, and they’ve done the same today.
“Unfortunately, that will filter through to mortgage rates in the coming days and weeks, so we’re preparing for even higher mortgage rates, particularly 2-year fixed rates, and for rates to hang around higher for longer than any of us would like to see.”
Riz Malik, founder & director at R3 Mortgages:
“Unfortunately, due to ultra-volatile money market movements, we have a very bumpy road ahead, potentially for the remainder of 2023. More base rate rises are predicted given the absence of data that shows the UK economy is struggling.
“Positive news around the economy is ironically translating into bad news for borrowers as markets then expect Threadneedle Street to conclude it has the wiggle room to hike rates more aggressively, hence the spike in SWAP rates. I do not like what I am seeing.
Katy Eatenton, mortgage & protection specialist at Lifetime Wealth Management:
“For me, Monday fortunately wasn’t that bad as I’d dealt with all the applications on my desk on Friday and over the weekend. I made it very clear to those clients who I am in initial conversations with that rates would be higher this week if they didn’t get all documents over to me or they hadn’t found a property yet, and this had been factored into the cost of the mortgage payments when discussing their options.
“Hopefully we will see some stability in the weeks ahead, but today could be another eventful one.”
Graham Cox, founder at SelfEmployedMortgageHub.com:
“Swap rates have risen a further 0.1% or more just since last Friday, which may explain the current deluge of pulled mortgage products. Quite simply, the cost of funding for lenders is fluctuating so much that they can’t keep up.
“That said, I do think the banks need to be regulated to give 24 hours’ notice of product withdrawal. The status quo of only giving notice if they feel like it is unfair to consumers and brokers alike.”
Jonathan Miller, director at 365ifa:
“The one thing that is being missed in all these rate rises is the media interest in the matter. Ask any mortgage broker, and we’d much prefer mortgages to be a subject for the Sunday papers only rather than daily headlines across all media outlets.
“Mortgages are the new ‘Toilet Rolls’ and, as such, they are being priced by the lenders higher than they need to be. Premiums are being paid on fixed rates as no lender wants to sit on top of the tree with the published rate tables.
“Each time a lender is exposed to being at the top, the rates are repriced higher to turn business away. Those who are in effect Mortgage Prisoners, whether due to income issues or criteria, are left with no options but to take what they can.
“Whilst the volume of business for 2023 will be significantly reduced for lenders, long-term profitability due to these premiums will more than make up for it.”
