Rates and services levels 'will settle'

Speaking to FTAdviser, the lender’s head of intermediary relationships, Jonathan Stinton said he is hopeful that the situation will improve soon. 

“The speed and size of the latest increase in swap rates has meant that lenders have had to react quickly. This, in turn, has prompted a short-term race from consumers to grab a fixed-rate deal before products are withdrawn or rates increased,” Stinton said. 

“In some cases, that has seen lenders receive an unexpectedly high volume of applications, putting pressure on their service times and potentially creating significant costs for those that don’t have any hedge left.”

He continued: “Therefore, in the short term we expect a greater level of volatility, but we are optimistic that over the medium term rates will settle, alongside service, with swap rates falling further over the long term.” 

Coventry Building Society has been frequently praised by mortgage brokers for its 48 hour notice period of rate withdrawals. 

“If a lender decides they don't want to give notice and your client hasn't provided their documents that is their fault for not providing them — Luke Thompson, PAB Wealth Management

The lack of notice for withdrawals has put huge pressure on brokers in recent weeks, with many working extended hours to get deals secured for their clients. 

With the sharp increase seen in interest rates, not doing so risks costing their clients hundreds of pounds more a month in mortgage repayments. 

Stinton said he recognises the important role brokers are continuing to play in supporting borrowers. 

“Many are putting in a great deal of work to secure favourable rates for their clients,” he said. 

Coventry’s notice period policy has been in place since before Stinton joined the business, which he said means it has been there for at least 15 years. 

The lack of notice from other lenders has prompted the creation of a new organisation representing mortgage brokers, The Broker Collective, to ensure fair treatment for brokers and their clients.

However, not all brokers are on board with mandatory notice periods, with some arguing that it could lead to some unintended consequences - including pushing rates up even further. 

The issue has led to debate among brokers about lenders’ duties to clients, with one broker saying some in the industry are simply “never happy”. 

This was the view of PAB Wealth Management’s director, Luke Thompson. 

“I am a member of a few Facebook mortgage groups and there do seem to be some brokers who are never happy. It's a tough job and it is very frustrating when lenders pull rates at short notice but at the end of the day you can only do what you can do,” he said.

“If a lender decides they don't want to give notice and your client hasn't provided their documents that is their fault for not providing them,” Thompson added.

Gary Bush, a financial adviser at MortgageShop.com admitted that some brokers do “like to grumble occasionally”, but he said with lenders’ behaviour recently it is not surprising. 

“I think mortgage advisers are some of the most robust individuals working in the UK,” Bush said. 

“In 2023, to see lenders repricing twice in a week does beggar belief. Something needs to be done to improve this process or the general public will think the industry is all-round pathetic,” he said. 

According to Moneyfacts, there are now less than a handful of lenders offering fixed-rates below 5 per cent today. 

Just last week (June 15), Nationwide, one of the UK’s biggest lenders, announced that it was going to increase its rates by up to 0.70 percentage points from today. 

This followed on from a 0.45 percentage points increase only a few weeks ago. 

jane.matthews@ft.com