Private Finance’s Mortgage Memo

This is our take on what is currently happening in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.

  • Numerous lender product withdrawal
  • Clients bring forward further advance to lock in good rates
  • Base rate rise sparks remortgage demand but slowdown for purchase

Numerous lender product withdrawal

Over the last few weeks, we have noticed a sharp increase in the number of mortgage lenders withdrawing certain products, either temporarily or for the foreseeable, or not accepting new business for now.

  • A few examples include Coventry BS, Suffolk
    BS, Digital mortgages and Precise mortgages
  • Largely, this is due to the recent abnormally
    high volumes of business for mortgage lenders, many do not appear to be able to
    handle this level of demand and therefore are withdrawing certain product or
    pausing new business to clear backlogs and offer better service to existing clients.
    While nationally we are seeing a skill shortage in many sectors of the UK
    economy, perhaps this is also impacting the mortgage lending environment and
    there is skill shortage, for example underwriters.
  • This trend is certainly causing a rush to submit
    applications to lock in competitive rates for our clients, with some
    announcements offering as little as a few hours to secure a rate that a broker
    may have already quoted to a client, especially for a competitive product that
    has seen large demand. The choice becomes more limited for competitive
    products, especially with mortgage rates increasing.

Clients bring forward further advance to lock
in good rates

Recently, clients have been enquiring more
regarding further advances, in particular to finance their home improvements.
Mortgage lenders have also referred further advance business to us as they
cannot cope with the demand, especially as they appear inundated in their main
mortgage product offerings.

  • Many of these clients have been bringing forward
    their plans for home improvements taking out a further advance now to lock in a
    good mortgage rate over fears of large interest rate increases in the short
    term making that money cost more if they waited.
  • One lender has even been encouraging clients
    to return their business back to their broker as this is easier for them while
    they work on their internal timescales (better to get a fully packaged case
    from a broker then have their staff spend hours doing fact finds and getting
    drip fed documents).
  • This is an interesting side effect of mortgage
    rate rises which has actually encouraged more borrowing. Perhaps borrowers are
    delaying their next step on the property ladder because either it is too costly
    to move or less risky to stay. Instead they look to improve their current home
    to make it suitable for their current circumstances and take out a further
    advance to do so.

Base rate rise sparks remortgage demand but slowdown for purchase

Since the latest announcement by the MPC
committee and the sixth consecutive rise in the base rate to 1.75%, we’ve
noticed an increase in the number of enquiries for remortgages and a slowdown
in demand for purchases. 

  • Some of our partner agents are also reporting a slowdown in new listings and new purchasers recently also as it appears rising mortgage costs, market and economic uncertainty, and the rising cost of living are becoming more impactful on buyer demand and sellers’ confidence. 
  • Between mid-last year and early this year, our
    business for remortgages has been higher than the purchase market, most likely
    due to rate rises acting as an impetus for borrowers to remortgage. While purchase
    and remortgage business was roughly equal between April and May this year, we
    are starting to see that gap reappear once again, it seems the recent base rate
    announcements has encouraged more remortgages once again.

If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.

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