Brokers Demand Rate Withdrawal Notice Periods

It used to be normal for mortgage lenders to give both mortgage brokers and mortgage applicants 48 hours notice when withdrawing a mortgage deal or rate.

This has dramatically changed over the last few months with many lenders dropping down to 24-hour notice periods, others offering just a few hours notice and in one case a lender gave just 25 minutes notice when withdrawing a product.  This problem has raised its ‘ugly head’ again with 10% of all mortgage products being pulled last week.

Doubling Up the Work and Stress

With higher interest rates at present, both brokers and borrowers are working harder to find the right deal.  It is not easy at present with lenders stricter with their criteria making it a tougher process to find the right mortgage deal that a borrower is happy with and can afford.

With 48 hours notice, where applicants have a provisional ‘decision in principle’ to lend, there is still time to get all required information to the lender but offering 24 hours or just a few hours is not enough meaning you may have already missed other mortgage deals and must do all the work again to research, find and make an application for another mortgage scheme.

Higher Interest Rates and Swap Rates

We know that the Bank of England has increased interest rates 13 times in the last 18 months.  This is much the same for bank swap rates, i.e., banks and institutions lending funds to other banks and mortgage lenders with rates changing all the time.  Lenders are hard pressed themselves to borrow money to then lend it out quiickly.  Volatility in the commercial banking world is spilling over into the retail mortgage world resulting in educed notice period before a deal is withdrawn.

Comment

Mortgage Brokers across the country are again calling on the regulator to intervene and force longer notice periods for withdrawal to offer both brokers and borrowers stability. 

In our opinion, this forms part of the new Consumer Duties that financial firms are required to follow i.e., we should all be acting in the best interests of clients.  In our opinion, lenders are not doing this in withdrawing rates with little notice when they have records as to how many applicants are in the pipeline for a particular deal.  If a decision in principle has been issued and then the full application has been made, the lender should have those funds reserved for that applicant.

A 48 mandatory notice period should be introduced for all mortgage deals.