Following the withdrawal of 10 per cent of mortgage deals in the past week, mortgage brokers have again called for mandatory notice periods from lenders.
Appearing on Sky News this week, mortgage broker Riz Malik, director of R3 Mortgages, renewed calls for mortgage lenders to commit to a pledge to give brokers and consumers more notice on rate withdrawals - ideally 48 hours.
Malik explained that “it’s not looking great for the next couple of months” if the volatility continues.
He noted that it is the borrowers who are coming to the end of their mortgage terms between June and September of this year who will feel the brunt of higher rates and noted that on average monthly repayments will be up by £200 to £300.
“The problem is that rates are being withdrawn, and they are being withdrawn with very little notice,” Malik said.
“We are asking more and more lenders to sign up to a pledge, similar to Coventry Building Society, that they will give us 48 hours notice before they pull any deals or products so consumers have time to get their ducks in a row so to speak and make any applications,” he said.
Malik added that he is backing a government-backed review into the mortgage market, especially in regards to pricing to see “exactly what can be done to improve the outcomes for consumers”.
The recent trouble in the mortgage market started last week after the inflation figure for April was higher than the Bank of England initially forecast causing swap rates to soar.
In turn, this led to mortgage lenders pulling products in their droves in order to reprice upwards.
Brokers have previously called for lenders to introduce mandatory notice periods for rate changes, but with little success.
Earlier this year, mortgage brokers called for at least a 24-hour notice period on product changes after TSB gave intermediaries just 25 minutes warning of a rate hike.
Commenting on the current situation, Craig Fish, the managing director of London-based mortgage broker Lodestone said “the carnage continues and is getting ridiculous.”
He noted that he was on hold with one high street lender for more than 30 minutes to discuss a client case after the lender announced they were withdrawing rates at 10.30pm that evening.
“Do the lenders think that the future is this uncertain?,” Fish asked.
“After all swap rates have started to come down again, so what is this all about really?,” he added.
Sonia swaps
Current | 31 May 2023 | 02 May 2023 | 01 Jun 2022 | |
1 Year | 5.127% | 5.142% | 4.688% | 2.033% |
2 Year | 4.933% | 4.953% | 4.388% | 2.394% |
3 Year | 4.710% | 4.730% | 4.163% | 2.418% |
5 Year | 4.364% | 4.401% | 3.880% | 2.334% |
7 Year | 4.143% | 4.187% | 3.701% | 2.235% |
10 Year | 3.997% | 4.044% | 3.586% | 2.170% |
15 Year | 3.931% | 3.975% | 3.551% | 2.132% |
30 Year | 3.777% | 3.817% | 3.420% | 2.019% |
Source: Chatham Financial / Updated 01 Jun 2023 | 22:30 GMT
Likewise, Matthew Jackson, the director of Salisbury-based brokerage Mint FS said the situation would "make you laugh".
"48 hours notice used to be the norm, then it moved to 24 hours and now it seems perfectly acceptable to all lenders to give little or no notice to brokers and their clients.
“Virgin close at 5pm but are happy for us to work until 8pm desperately trying to hit the deadline they have imposed to ensure that their future clients are treated fairly. Hardly a balanced relationship is it?,” he said.
Some in the industry have questioned how these short notice periods align with the forthcoming consumer duty, the deadline of which is fast approaching in July.
However, FTAdviser understands that the Financial Conduct Authority and its consumer duty will not present any new obligation on lenders on this front.
Lender pledge
Malik has launched a campaign to get lenders to introduce mandatory notice periods for lenders alongside fellow mortgage brokers Lewis Shaw, director of Riverside Mortgages and Jamie Lennox, director of Dimora Mortgages.
The trio are asking others in the mortgage sector to join with them in requesting lenders to introduce notice periods of 12, 24, or 48 hours before they withdraw rates.
“We understand why they need to move quickly but we are sure we can find a happy medium,” Malik wrote on LinkedIn.
The campaign is asking lenders to make changes and sign a pledge across four key pillars:
- Advance Notice: Before discontinuing any mortgage product, we pledge to provide a minimum notice of 24 hours to all affiliated brokers.
- Communication: We commit to clear, concise, and open communication channels. We will ensure that this advance notice is distributed through multiple channels to reach every broker and give them ample time to adjust their strategies and advice for their clients.
- Support: We pledge to offer assistance where possible to aid brokers in their advisory role & work collaboratively with brokers to minimise any disruption.
- Review: We will periodically review this pledge in consultation with brokers to ensure its effectiveness and make any necessary adjustments that can further enhance the relationships and trust among all parties.
jane.matthews@ft.com
