The Scottish Building Society has withdrawn three of its 60 per cent loan-to-value mortgages after it reported ‘unprecedented demand’ for the product.
In a statement yesterday (May 18), the group said it had withdrawn the five-year fixed rate products with immediate effect, and apologised for the lack of notice given.
The products being withdrawn are:
- FIX5Y043 - 5 Year Fixed 60% £995 Fee - 4.09%
- FIX5Y046 - 5 Year Fixed 60% £0 Fee - 4.29%
- FIX5Y049 - 5 Year Fixed 60% £995 Fee - 4.09%
Brokers said this seems to be a result of the popularity of the offering, as high interest rates have made borrowers more price conscious.
Justin Moy, managing director at EHF Mortgages, said: “By the looks of the mortgages rates being withdrawn, this mortgage lender has been caught with some too-competitive products whilst the rest of the market has moved in the last week or so.”
He added that smaller building societies have a limited processing capability, so the immediate withdrawal would be essential.
Graham Cox, founder at selfemployedmorgagehub.com, said with mortgage rates at 15-year highs, borrowers are more ‘price’ conscious than ever.
“Any lender who finds themselves at the top of the product leaderboard tends to get swamped with applications.
“They then have to withdraw the product to allow their staff to catch up.”
Ross McMillan, mortgage adviser at Blue Fish Mortgage Solutions emphasised how a smaller company will need to keep a “tight rein” on funding availability at different tranches of their mortgage book to demonstrate “sustainable and sensible lending for their members.”
“This recent withdrawal, however abrupt, is just an example of prudent management in my view and another indicative measure of the healthy demand for funding from the general public within the current market,” he said.
Property market turmoil
The mortgage and property markets have been affected by the steep and quick rise in interest rates, which has seen the Bank of England raise the base rate of interest to its highest level in 15 years in an attempt to quell high inflation.
Lewis Shaw, broker at Riverside Mortgages, said we are “nowhere near the end” of the turmoil in the mortgage and property markets.
“So when lenders sit at the top of the sourcing list, especially smaller lenders, it's not long before they become too busy or run out of money to lend at that rate,” he said.
“We're continually seeing lenders repricing in response to market conditions, so it's not unusual; however, as the economic outlook continues to deteriorate throughout this year, we'll see it more frequently.”
However, Moy and McMillan did not agree, with the former saying he does not see any other pricing anomalies in the market.
“It is unlikely we will see something like this for a while.”
McMillan said: “This is not, in my view, cause for or any kind of sign of any deeper alarm.”
Earlier this month, the Royal Institution of Chartered Surveyors said the outlook for the housing market is “improved and steadier”.
sally.hickey@ft.com
