"Regulators need to be looking at the chaos"
Mortgage brokers have expressed their frustration over the practice of some lenders of pulling their products from the market just hours after they announced such decisions.
Brokers reacted, in particular, to a TSB announcement on Monday that the lender was withdrawing residential and buy-to-let products on the same day at 4pm, less than four hours after they notified brokers by email.
All two-, three-, and five-year fixed house purchase and remortgage £995 fee products in its residential range were pulled by TSB, while all two-year fixed house purchase and remortgage £1,995 fee and £0 fee buy-to-let products were also withdrawn.
The lender advised brokers to submit existing applications for the said products before the 4pm deadline “as they won’t be available after this time.”
A TSB spokesperson commented: “The current rate of change in the mortgage market means that we sometimes have to act to ensure that we maintain the service standards that brokers and other customers expect from us. We have kept a full range of residential products available and have just made selective withdrawals to ensure that products remain on sale.”
But brokers, who had been asking lenders to observe a minimum notice period of 24 hours on product withdrawals, certainly did not appreciate the short notice from TSB – not once – but four times.
“Three hours’ notice of rate withdrawals isn’t considering the client or the adviser,” said Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management. “This is the fourth time TSB have done this in less than two weeks. It comes as Santander has announced they are keeping rates steady for now, although I do think this will be the first of many withdrawals this week.”
Read this article for more rates of Santander Mortgage for First time buyers, remortgage, and moving home.
Gary Bush, financial adviser at MortgageShop.com, asked why TSB was doing its announcements at very short notice when other lenders like Santander appeared to have acted early and were currently resting from any changes.
“The system is broken, and I think the regulators need to be looking at the chaos being caused by UK lenders,” he said.
According to Matthew Jackson, director at Mint FS, lenders such as TSB were “running the risk of damaging their reputation irrevocably, or at least becoming a laughing stock with brokers around the country” by not giving ample time for brokers and their clients to submit their applications.
“Three hours and 45 minutes’ notice, with the cut-off not even at close of business but 4pm – it makes no sense and is a real kick to mortgage brokers who are frankly working themselves into the ground at the moment,” Jackson said. “They would undoubtedly have known about the products being re-priced on Thursday or Friday, so why not give a good amount of notice and tell the market then?”
Last week, brokers gave a thumbs up to Coventry Building Society for giving a 48-hour notice on product withdrawals. Other lenders such as Market Harborough Building Society, Tandem Bank, and Cambridge Building Society have also joined the brokers’ 24-Hour Product Withdrawal campaign.
The Intermediary Mortgage Lenders Association (IMLA), however, said that while mortgage product withdrawals at very short notice could be frustrating for all concerned, a mandatory notice period might be difficult for many lenders to comply with, as there could never be a “one size fits all” approach to giving such notice.
“The root cause is the current volatility in the swaps market, combined with the continuing speculation about further rises in Bank of England base rate,” explained Kate Davies, IMLA’s executive director.
“In practice, we do not think there could ever be a ‘one size fits all’ approach to giving notice of the withdrawal of a particular product. This is due to different lender funding strategies, which will drive the need for some lenders to move very quickly in order to remain prudent and profitable when there are large and sudden increases to funding costs.”
Michelle Lawson, director at Lawson Financial, agreed, saying that while the TSB short notice was not ideal, overall, it was “a sensible move”.
“There is so much uncertainty and instability as the Bank of England and government just cannot get a handle on the severity of the situation we are in,” she commented. “I think lenders are just going to be forced in withdrawing completely until the inflation announcement on June 21 and the subsequent Bank of England rate decision on Thursday.
“This is a dire time for anyone wanting a mortgage currently, and actually, for all in the industry. Somebody needs to step in sooner rather than later and get this disastrous mess on a better path.”
“Unfortunately, this is another episode of a lender giving brokers very little notice in changing products,” added Kylie-Ann Gatecliffe, director at KAG Financial. “As mentioned by other advisers, we really need to get to grips with a fair approach for both brokers and their clients. With Consumer Duty looming, pressure should not be put on clients to make decisions quickly, which rates getting withdrawn quickly is resulting in.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
