Backing for 24-hour Mortgage Product Withdrawal Pledge

Support appears to be growing for a campaign to improve lender communication and increase the notice given about withdrawn mortgage products. 

Brokers Riz Malik and Jamie Lennox came up with the concept of the pledge following the withdrawal - with just an hour’s notice - on HSBC and Nationwide products last week. And in recent days Santander has taken a similar approach. 

Malik and Lennox say a 24-hour notice rule would give clients time to consider alternative options and protect the market from fraudulent activity. They also believe brokers can make errors if they have to scramble to make rushed submissions.

The campaign has now been backed by MPowered Mortgages, whose chief executive - Stuart Cheetham - says: “As a lender, when there is a large movement in swap rates, we need to make a call as to how we react. This will inevitably depend on how much volume we are originating, how quickly we think any remaining hedge will last, what the cost of that new hedge will be and, of course, how any withdrawal will impact our brokers. 

“Lenders have a regulatory and legal duty to act responsibly to protect their business, customers, and the industry as whole. The key is minimising the impact on borrowers and brokers in the market, and this is why we welcome this initiative.

“If lenders were to guarantee notice periods, this would inevitably lead to new and higher costs, particularly when rates are rising, and this would almost certainly mean higher mortgage rates for borrowers, something that lenders industry-wide are trying to avoid.

“We would implore all brokers to keep an eye on the swap rates to position themselves at an advantage and continue to offer the best advice to their customers, which we know they are so dedicated to do.”

The Intermediary Mortgage Lenders Association and the Association of Mortgage Intermediaries have been more cautious, suggesting that a ‘one size fits all’ approach mis-reads the different circumstances of different lenders, some of which may not be able to adhere to artificial deadlines.