Analysis of the news: product withdrawals cause “carnage”

It’s no industry secret that many lenders are frantically pulling product lines – sometimes their entire supply – off the shelves with the promise of a quick relaunch.

For example, according to data provided by Moneyfacts, things started in August with Post Office Money cutting its range, followed by the Coventry Building Society taking the same action on August 5. On August 9, the Suffolk Building Society also withdrew its range of mortgages, and on August 12, Platform withdrew from the mortgage market, with the Family Building Society also removing all of its fixed rate offerings on the same day.

On August 16, Gatehouse Bank withdrew its property finance products from the market, as did Al Rayan Bank on August 19, followed by Dudley Building Society on August 20.

Among these are many instances of certain fixed rates, specific loan-to-value range products, and other niche mortgage offerings turned off and on, which to an outsider seems quite chaotic.

And, still according to Moneyfacts, they are not always turned on. At the end of July, brokers could choose from 4,409 residential products; a number which, by the end of August, had fallen to 3,918.

Another surprising statistic: in July, the average life of a mortgage was only 17 days; in June it was 21 days.

The logic is clear to everyone: the economy is entering dangerous territory and new buyers, just like existing homeowners, want mortgage rates locked in before the Bank of England makes another drastic rate change. of interest.

However, knowing this does not make things easier for brokers and their clients. Most brokers Mortgage strategy spoken to expressed frustration.

Aaron Strutt, director of product and communications at Trinity Financial, said product withdrawals over the past few months had “caused carnage” and processing backlogs had compounded that problem.

Clare Jarvis, Partner Director of the Mortgage Advice Bureau Network, says: ‘I am often with clients when the email comes in telling them that a product is out in a few hours meaning there will be no chance to guarantee the rate on time.

“It’s really frustrating, and I personally take responsibility for trying to get the best deal for my customers. If, for example, I was unavailable during the product recall notice period, I would consider that I let my client down and cost him money by making him take a higher rate!

Managing Director of SPF Private Clients, Mark Harris, addresses a similar issue, saying: “While some lenders provide reasonable notice of product changes, others give little or no warning. This causes frustration for brokers and customers.

“Managing client expectations by informing them of current market activity is a key part of the broker’s role. We obtain customer documentation as soon as possible in order to react quickly in the event of a product change. »

Strutt says, “Our brokers explain to clients that the market is busy and many lenders are struggling. They informed them of service standards and the dangers of a case taking weeks to process and then potentially being refused.

A longer notice period for product changes is, of course, what brokers would like to see. When asked, Jarvis says 48 hours would make her more comfortable and Strutt goes further, wanting 24 hours as the industry standard – although he concedes: “It potentially opens up lenders to huge volumes of last minute quotes and that’s what many of them want to avoid. »

He adds: “Some banks and building societies give more notice than others, but I’m sure the conversations are coming back internally and lenders are doing what they can to give as much notice as possible. That said…a rate withdrawal email at 4pm, saying to submit applications that evening, causes unnecessary stress.

As with marriage, with mortgages, it seems communication is key.

Harris says, “Where some lenders aren’t as generous with their notice periods, a slight ‘warning’ from business development managers always helps. Clear communication with brokers is vital.

He adds: “In most cases, a full application is required to secure a product. Barclays, however, is only asking for an Esis [European standardised information sheet] to be generated on his system for the chosen product, with the Dip [decision in principle] and a complete application to follow before a confirmed deadline.

On this topic of outstanding lenders, says Jarvis, “Halifax seems to be running the service, and the communications from HSBC are fabulous. Halifax and Accord are “particularly broker-friendly”.

She adds: “Smaller lenders don’t always get the headlines from the industry press and if brokers aren’t registered with them or haven’t used them before, they may not get the email. notice of withdrawal of the product, which may mean that we quote the rate and the next day it is gone without knowing it.

If anyone reading this is looking forward to calmer times soon, keep Strutt’s parting words in mind:

Media and communications graduates…maybe it’s time to show the (mortgage) world what you’re capable of!

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