Brokers have called for a 30-day mortgage reservation at the stage of agreement in principle as lenders pull rates with hours notice amid the conflict in the Middle East.
There has been volatility in the mortgage market following the economic shock caused by the conflict in the Middle East.
The market has seen mortgage rates rise by 0.6 per cent in just one month and has led to lenders withdrawing over 1,500 products over a single fortnight in March.
Lenders are currently pulling deals with just hours of notice, placing pressure on property chains due to “panic-submitting” and incomplete applications.
As a result, The Mortgage Geezer founder, Darryl Dhoffer, called for all high street lenders to adopt a minimum 30-day rate lock at the AIP stage to prevent a “domino effect” of collapsed deals when rates expire mid-transaction.
“The ‘Blink-and-You’ll-Miss-It’ lending environment is a disgrace. As oil hits $115 per barrel and 1,500 mortgage products vanish in a fortnight, lenders are retreating into a ‘Wild West’ of panic withdrawals,” he said.
“Pulling deals with hours’ notice isn’t managing risk, it’s sabotaging the British dream of home ownership.
“I am demanding a mandatory 30-day rate reserve at AIP. We need to stop the ‘firefighting’ and start stabilising property chains.”
Lawson Financial director, Michelle Lawson, called for “stability” in chaotic times, stating “we need to see a shift in how lenders hedge their funds to allow this which will be quite a change for the industry”.
She added the market needed to “learn and progress” from the events over the past six years to provide “certainty and sanity” to people even when it is running on “instability”.
“There are so many benefits for all for product reservation — we know it can be done as some lenders do it,” she continued.
“Reserve the product, have a period of time to finish the submission and provide documentary evidence and it will improve the accuracy of the applications and stop spikes in business.
“It also takes away the pressure for borrowers to make heavy decisions in such chaotic times.”
Meanwhile, Shaun Sturgess, director at Sturgess Mortgage Solutions, suggested that brokers were being forced into “constant firefighting” as the frequency of recent rate withdrawal and repricing has “been excessive”.
Sturgess described the potential for a mandatory 30-day rate securing period as a “huge step” forward for the mortgage market.
“Brokers are being forced into constant firefighting, while borrowers are left making major financial decisions with little certainty from one day to the next. That is not a fair or sustainable way for the market to operate,” he said.
“Lenders may argue volatility justifies flexibility, but too often that flexibility appears to protect margins while consumers carry the risk.”
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