The Intermediary Mortgage Lenders Association (IMLA) and The Association of Mortgage Intermediaries (AMI) have issued a joint statement after brokers vented their frustration about short-notice product withdrawals from some lenders.
The past fortnight has seen a number of lenders withdraw products to reprice after inflation figures came in higher than expected earlier this month. This has seen interest rate expectations increase with the Bank of England set to make its next decision on 22nd June.
But while some lenders have been praised for their handling of the situation others have drawn ire from brokers with one group calling for a 24hr notice period before products are withdrawn from the market.
A LinkedIn poll currently being conducted by The Intermediary has 91% of respondents voting in favour of such a notice period being put in place.
Kate Davies, executive director at IMLA, acknowledged that the withdrawals will have caused frustration for brokers and their clients but questioned the feasibility of a one size fits all rule on notice periods.
“There is currently much comment in the press about the number of mortgage products being withdrawn from the market, often at very short notice”, said Davies.
“This is frustrating for brokers, customers and lenders, but decisions to withdraw products and re-price are taken only when absolutely necessary. The root cause is the current volatility in the swaps market, combined with the continuing speculation about further rises in Bank of England base rate.”
She continued: “In practice, we do not think there could ever be a “one size fits all” approach to giving notice of the withdrawal of a particular product. This is due to different lender funding strategies, which will drive the need for some lenders to move very quickly in order to remain prudent and profitable when there are large and sudden increases to funding costs.
“IMLA members do take this issue very seriously and will continue to do their best to give brokers as much notice as is reasonably possible when a product is about to be withdrawn. We all look forward to a less bumpy outlook when interest rates and markets settle down.”
Robert Sinclair, chief executive at AMI, said brokers were not unsympathetic to the challenges currently faced by lenders. However, he said lenders could follow some guidelines which would help brokers when it comes to withdrawals.
Sinclair said: “AMI acknowledges the volatile market conditions and the need for lenders to protect their pipelines, margins and profitability. However, sudden product withdrawals could be seen to be indicative of insufficient pipeline monitoring.
“We recognise that a mandatory minimum notice period might be difficult for many, but we ask lenders to think about their broker partners and their current and potential customers by giving as much notice as possible.
“It would be preferable if withdrawal periods could be measured in hours and not minutes, with thought given to when cut-offs are announced, not at weekends or late in the day. It would be helpful if lenders could commit to try to give 24 hours’ notice, with both announcement and deadline falling between 9-5 Monday to Friday. That would be of great benefit to all.
“We will continue to work with IMLA to see if we can establish some industry guidelines and best practice that all firms can support.”
