In light of recent events, a group of mortgage brokers has called for the introduction of a 24-hour minimum notice period for product withdrawals by lenders.
This comes after some lenders withdrew their products abruptly, leaving brokers and their clients in a state of confusion and uncertainty.
Mortgage brokers — Riz Malik, Jamie Lennox, and Lewis Shaw — are leading the call, asking that lenders sign a pledge to provide a minimum notice period of 24 hours to all affiliated brokers before withdrawing any of their products.
This move is intended to safeguard the interests of both brokers and their clients, ensuring that they are well-informed and prepared for any changes in the lending landscape.
This issue comes at a time when economic uncertainty, the ongoing cost-of-living crisis and the soon-to-be-implemented Consumer Duty have put a spotlight on the relationships between lenders, brokers, and their clients.
Lewis Shaw, owner and mortgage broker at Riverside Mortgages, said: “We understand that lenders are commercial businesses that have to turn a profit. We understand that lenders have to react to market conditions and often at short notice. We understand that events happen that blindside everyone.
“However, given that some lenders regularly allow up to 48 hours notice, we feel a minimum commitment to 24 hours before withdrawing products would be fair. Fair on consumers, fair on brokers and fair for the mortgage marketplace if we’re all singing from the same hymn sheet.
“Hopefully, this will get the backing of our industry, and we can see positive change for everyone involved.”
Riz Malik, founder & director at R3 Mortgages, added: “We believe a notice period of 24 hours is not unreasonable. Typically, when lenders decide to reprice their products, they often have prior knowledge of the changes and can adequately prepare their revised product offering.
“Given the constant talk of market volatility, it becomes crucial for brokers to have sufficient time to adjust their strategies and inform their clients accordingly. In light of this, I am curious as to how Coventry Building Society manages to pledge a notice period of 48 hours when others are adamant they cannot. We urge other brokers to join the campaign.”
Jamie Lennox, director at Dimora Mortgages, concluded: “In this day and age, there are zero excuses for lenders not being able to give a minimum 24 hours’ notice when withdrawing products. Saying it’s all down to market volatility doesn’t really wash in our eyes.
“These banks will have a huge team of experts in place to monitor these movements in advance before changes are actually made. None of these banks will be having a board meeting at 12pm and then rolling out new rates that same evening.
“It is a logistical job that will take a number of days’ planning and updating their own software, their websites and informing mortgage sourcing software. All we are asking is if you know you plan to withdraw rates, let us know once that decision is made.”
Free PR platform Newspage asked its members for their take on a potential minimum notice period. Here’s what they had to say:
Justin Moy, managing director at EHF Mortgages:
“I definitely back the campaign. It’s ultimately about whether the FCA needs to step in, if it is a voluntary code by lenders, or if it sits within the remit of Consumer Duty. But yes, increasing the exposure of this issue is really important.”
Paul Neal, mortgages & equity release advisor at Missing Element Mortgage Services:
“Well done. The immediate or negligible notice of product withdrawals is having a real detrimental impact on the mortgage market.
“With Consumer Duty around the corner, as brokers, we are responsible for giving our clients the best advice possible.
“They’re making decisions on possibly the biggest purchase they will ever make, and for us to tell them they have two hours to make that decision or their rate will go up is putting them under unnecessary stress and forcing them to make a decision.
“A minimum timeframe adopted by all lenders is something the market very much needs.”
Matthew Jackson, director at Mint FS:
“I will absolutely bang the drum in support of this. However, the question, is will any lenders take notice? The past three years have taught me that the lender/broker relationship is often a one-way street.
“We are constantly told what we have to do to support their clients and agendas, but if brokers ask for 24 hours’ notice, which is totally reasonable, the question is: will lenders take action or even care?”
Chris Sykes, technical director and senior mortgage adviser at Private Finance ltd:
“Personally, I don’t agree. Yes, it would be great for my own sanity if there were minimum notice periods, and yes, I have had far too many nights where I’d rather be spending time with my wife than submitting mortgage applications.
“However, lenders are businesses reacting to the market, some quicker than others. The rates we have seen over the past week in many cases have been under SWAPs. Lenders will hedge certain amounts of funds at certain rates and once that hedge has run out anything further they lend is at a loss.
“My fear would be, if lenders are forced into minimum notice periods, it would be a net negative for the end borrower as lenders would have to factor this pricing risk into the rates that they offer.
“We have seen situations where on days rates are being pulled lenders get 20x the level of business they usually would. If that turned into 50x that could be a real issue that then would have to be offset somewhere else, not to mention the processing issues of 50x volume.”
Joe Stallard, director and advisor at House and Holiday Home Mortgages:
“Sounds great in principle but lenders are recalibrating to the current climate and mortgage markets are mirroring rapid external change.
“Challenges are all due to the market’s unpredictability as well as rapidly shifting consumer preferences. It would make our lives easier to have a minimum 24-hour notice but what if it led to overly cautious pricing from lenders? And the knock-on effects of that might disadvantage more customers than it helps. Rocks and hard places come to mind.”
Rohit Kohli, operations director at The Mortgage Stop:
“I’m in agreement. A 24-hour minimum notice should be the norm, and ideally, a 48-hour notice should be considered best practice.
“It’s evident that when rates are on a downward trend, lenders do not display the same urgency to adjust their offerings, which makes their justification for rapid changes when rates rise appear inconsistent.
“Lenders’ capacity to react swiftly when rates are rising should be matched by a similar commitment when rates are falling.
“More importantly, any significant changes that could impact clients should be communicated in a timely and transparent manner, irrespective of market trends. This is a campaign we wholeheartedly support.”
Graham Cox, founder at SelfEmployedMortgageHub.com:
“The way lenders treat brokers and their clients is incredibly disrespectful. We understand the current market volatility makes it difficult for lenders to price their mortgage products, but giving a few hours notice of changes is unfair and completely unreasonable.
“Not just on brokers, but the lender’s own intermediary support staff who get hit with a huge spike in live chat and call enquiries. If Coventry Building Society can manage to give 48 hours’ notice, why can’t all the other lenders?”
Adam Smith, founder at Alfa Mortgages:
“Absolutely I would back this. It makes the industry more professional and puts the best interests of the clients front and centre, in line with Consumer Duty.”
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“I have consistently expressed my admiration for Coventry Building Society’s commendable implementation of a 48-hour notice period, which sets a standard that other lenders should strive to emulate.
“If other lenders adopted a similar approach, not only would it alleviate the challenges faced by brokers, but it would also prioritise the needs of clients and align more closely with the principles of Consumer Duty.”
