larus
Well-known member
All down to the 'credit crunch' - I think it will get worse before it gets better, only question is how much.
Article from FT.
Banks that have long fought each other to win mortgage customers, are now, unusually, taking steps to repel them. Some are withdrawing entire mortgage ranges with very little notice and many are increasing interest rates to levels that are demonstrably unattractive.
Borrowers looking for new mortgages are being thrown into complete chaos as deals they have agreed with their broker disappear from the market just hours before applications were to be signed. Many are now facing unaffordable increases to mortgage payments.
The nub of the problem is that banks do not have access to sufficient funds or administrative resources to meet high borrower demand. Funding through the wholesale markets has become prohibitively expensive and lenders increasingly are having to rely on the limited funds they receive from customer deposits. Some lenders have pulled out of the mortgage market altogether, while those still lending have scaled back their product ranges significantly.
The high level of mortgage demand is being driven by the thousands of mortgage borrowers coming to the end of cheap fixed-rate deals each month.
“Any vaguely competitive mortgages are being snapped up very quickly by new buyers and those remortgaging,” said Melanie Bien at Savills Private Finance. “Once the funds have run out, lenders have been pulling the rates and have not always been able to give notice.”
Scottish Widows Bank removed its entire range of tracker mortgages on Thursday, along with its five-year fixed rates. The bank, which is struggling to deal with a significant increase in new applications, told mortgage brokers it was unable to accept calls about new business for a week. It is due to relaunch its range on Tuesday at far higher rates.
Mortgage brokers say the speed at which top mortgage rates are disappearing is creating significant problems for borrowers. Ian Gray, senior mortgage manager at Clegg Gifford Private Clients, said: “Those coming off deals now are feeling a big shock as there has been a huge jump in mortgage rates.” He says some clients face monthly increases of up to £400. If they cannot afford the higher payments they might, in extreme cases, have to sell.
Borrowers are also having to decide very quickly which mortgage to go for as some lenders are giving just a few hours’ warning when they are going to close a deal. There are numerous examples of lenders pulling rates within 24 hours. One lender even backdated the end of the deal to the previous day.
“The ridiculous thing was that at 3 o’clock in the afternoon the Scottish Widows deal was available,” said Mr Gray. “Forty-five minutes later the bank e-mailed to say it was being withdrawn at five that afternoon. That is not good practice.”
Ray Boulger, at the broker John Charcol, said banks were purposefully giving no notice as they wanted to improve service levels for existing applicants and did not want a last minute surge of business that “could send them into meltdown”.
Mortgage brokers say some borrowers are already having to wait weeks longer than expected to receive mortgage offers, which could hold up property purchases.
Ms Bien said: “Borrowers need to understand . . . they need to move quickly to secure a rate. If they dither – even by only a few hours – they should be prepared to be disappointed.”
Article from FT.
Banks that have long fought each other to win mortgage customers, are now, unusually, taking steps to repel them. Some are withdrawing entire mortgage ranges with very little notice and many are increasing interest rates to levels that are demonstrably unattractive.
Borrowers looking for new mortgages are being thrown into complete chaos as deals they have agreed with their broker disappear from the market just hours before applications were to be signed. Many are now facing unaffordable increases to mortgage payments.
The nub of the problem is that banks do not have access to sufficient funds or administrative resources to meet high borrower demand. Funding through the wholesale markets has become prohibitively expensive and lenders increasingly are having to rely on the limited funds they receive from customer deposits. Some lenders have pulled out of the mortgage market altogether, while those still lending have scaled back their product ranges significantly.
The high level of mortgage demand is being driven by the thousands of mortgage borrowers coming to the end of cheap fixed-rate deals each month.
“Any vaguely competitive mortgages are being snapped up very quickly by new buyers and those remortgaging,” said Melanie Bien at Savills Private Finance. “Once the funds have run out, lenders have been pulling the rates and have not always been able to give notice.”
Scottish Widows Bank removed its entire range of tracker mortgages on Thursday, along with its five-year fixed rates. The bank, which is struggling to deal with a significant increase in new applications, told mortgage brokers it was unable to accept calls about new business for a week. It is due to relaunch its range on Tuesday at far higher rates.
Mortgage brokers say the speed at which top mortgage rates are disappearing is creating significant problems for borrowers. Ian Gray, senior mortgage manager at Clegg Gifford Private Clients, said: “Those coming off deals now are feeling a big shock as there has been a huge jump in mortgage rates.” He says some clients face monthly increases of up to £400. If they cannot afford the higher payments they might, in extreme cases, have to sell.
Borrowers are also having to decide very quickly which mortgage to go for as some lenders are giving just a few hours’ warning when they are going to close a deal. There are numerous examples of lenders pulling rates within 24 hours. One lender even backdated the end of the deal to the previous day.
“The ridiculous thing was that at 3 o’clock in the afternoon the Scottish Widows deal was available,” said Mr Gray. “Forty-five minutes later the bank e-mailed to say it was being withdrawn at five that afternoon. That is not good practice.”
Ray Boulger, at the broker John Charcol, said banks were purposefully giving no notice as they wanted to improve service levels for existing applicants and did not want a last minute surge of business that “could send them into meltdown”.
Mortgage brokers say some borrowers are already having to wait weeks longer than expected to receive mortgage offers, which could hold up property purchases.
Ms Bien said: “Borrowers need to understand . . . they need to move quickly to secure a rate. If they dither – even by only a few hours – they should be prepared to be disappointed.”
