‘First few of many’: Four lenders pause new mortgage business

“These lenders which have stopped accepting new business are the first few of many. My gut feeling is there will be others.” said Hussain.

With rates only going up, Hussain added that no lender wants to offer a leading rate and that the percentage point differences between average and leading rates are shrinking.

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“Criteria and service levels are going to be the discerning factors now,” he explained. “We will see building society lenders especially pausing for 48 hours just to catch up.”

Hussain said the big six lenders will reprice themselves out of the market.

“They won’t be chasing rates. People will use them because they need to. We’re not going to see too many lenders trying to be the cheapest if service levels are above 72 hours.”

Big lenders are also changing document requirements in a bid to stem the flow of calls.

As of yesterday, NatWest required three most recent payslips on every employed application, whereas before a client with a 25 per cent deposit might have only needed to produce one most recent payslip.

“They’re going back to basics. That will probably stop them coming back to brokers with additional questions,” said Hussain.

Mortgage sales head David Gissing at London Mortgage Partners also thinks these are not the last lenders to withdraw from new business.

“I wouldn’t be surprised if others follow suit, some lender SLAs [service level agreements] at the moment are at four weeks to just carry out an initial review of documents and send a checklist of what’s required to underwrite,” he explained,

“Only a handful of lenders are maintaining good SLAs at the moment.”

Knock on effect to clients

With rates being pulled at hours’ notice, affordability tightening, lenders underwriting more stringently and ever-changing criteria, it is becoming harder for both brokers and their clients to navigate the mortgage market, according to Gissing.

“The knock on effect is clients left in the unknown without clarity, awaiting a mortgage offer for longer than we’re used to,” he said.

“Because of the speed we’ve seen rates rising in the last few weeks, if a lender does decline an application for any reason, clients are having to apply again with a new lender and are finding that rates for new applications are being offered rates significantly higher than when they made their initial application.”

Mansfield-based broker Lewis Shaw said “it's getting bonkers” and that he cannot understand why lenders are acting as they are.