Lenders continually withdrawing low rate mortgage products

greenhiggins29

Hi all, first post. In my first attempt at posting I may or may not have flew into to a big written rant and my mobile decided to lock up and deny you all the privilege of reading my words of rage. I am a little calmer now, so let's try again...
Has anyone got any thoughts on the shrinking list of mortgage products available compared to when the base rate was 0.75% in March to now, almost 2 months on when the base rate is 0.1%?

I would like you to share your views, feelings and thoughts...
I (fortunately) have had a 60% LTV mortgage offer since February/March but have been waiting for the ERC from my previous lender to end, which is at the end of May, so besides working and following lockdown isolating etc I have had nothing else to do but watch the good mortgage rates disappear until it's to time for us to complete.

I am concerned with how lenders decided to react to this pandemic and at the same time say they are working hard to support their customers. Ok lenders, so why did continually removing really low mortgages become the priority when the BER reduced to 0.1%?

It was almost as quick as shop keepers changing the price on bog rolls with marker pen (I say almost).
Maybe its just the frustration of a 4 week till lord knows when lockdown talking. Me and the other half are key workers, and we have had to work through whatever the hell is going on, why should options like this get taken away?

We would very much like  other peoples input on these matters. I have never seen lenders change their product rates so much. What are your thoughts?

[Deleted User]

Valuers cant get in to properties.  Without a valuation then a mortgage cant be agreed.  No lender wants to have thousands of half approved mortgages awaiting processing and no client wants to have a maybe yes/maybe no answer when they are trying to buy a house.   

Once valuers can get back to properties then mortgage products will flood back to the market

regard the actual rates.   A lot of lenders were already making a loss on mortgage products when the base rate was 0.75%.   Add an uncertain market, increased joblessness, more arrrears on current mortgage deals in the future,  less certainty for future business coming through.  Its no wonder lenders have increased rates.  No one wants to lend money at a loss then lose money further if the client goes in to arrears due to the economic worries. 

There are a thousand more variables to mortgage pricing than 'BoE rate low = mortgages should be low'

blue_max_3

It seems so many mortgages have a fee of around 1k to claw something back. Maybe that will increase too. They'll have their pound of flesh one way or another!

Thrugelmir

The product fee is set to discourage applications from borrowers only requiring smallish sums. Mortgage lending is a low margin business. There is a level at which business isn't worthwhile undertaking. 

Products are being withdrawn as lenders look ahead to the future. Rates are priced on risk not just the cost of funding. The outlook is probably best described as concerning. With huge levels of uncertainty. Lenders are required to run their businessess to very strict rules. 

There's a huge misconception that lenders fund mortgages at BOE base rate. Whereas historically much mortgage debt ends up being securitised and sold onto investors, primarily overseas ones i.e. US investment banks such as JP Morgan. We are a nation of borrowers not savers. As Mark Carney said some some months ago. The UK relies on the charity of strangers. The world is a financially complex place. Far removed from where it was just 25 years ago. 

blue_max_3

Thrugelmir said:

The product fee is set to discourage applications from borrowers only requiring smallish sums. Mortgage lending is a low margin business. There is a level at which business isn't worthwhile undertaking. 

Products are being withdrawn as lenders look ahead to the future. Rates are priced on risk not just the cost of funding. The outlook is probably best described as concerning. With huge levels of uncertainty. Lenders are required to run their businessess to very strict rules. 

There's a huge misconception that lenders fund mortgages at BOE base rate. Whereas historically much mortgage debt ends up being securitised and sold onto investors, primarily overseas ones i.e. US investment banks such as JP Morgan. We are a nation of borrowers not savers. As Mark Carney said some some months ago. The UK relies on the charity of strangers. The world is a financially complex place. Far removed from where it was just 25 years ago. 

Fair enough, but they could just stipulate a minimum loan. But they'd be 1k poorer of course, so maybe this ruse works for them better.

MovingForwards

@blue_max_3 lenders do stipulate minimum mortgage loans in their criteria. It still costs them money to process applications eg pay wages / overheads etc.

Thrugelmir

The £1k would be recovered in one form or another. The upfront cost to the business of underwriting a £120k or £180k loan is the same. Easier to market, administer and manage a single product with a flat upfront fee. Than a series of related tiered interest rate products that have lower interest rates as the amount requested increases.

greenhiggins29

Thanks for your response Deleted_User.
I know me and my other half are fortunate to be a redemption statement away from completing our remortgage, not everyone is so lucky with the way things are going. A valuation was carried out on our home in March, we are just waiting for our previous lenders ERC period to expire.
We are currently on a discounted variable atm that follows our existing lenders SVR less the discount until we switch-not a high rate. Our new remortgage rate with the lender we bank with is an improvement.

My frustration came from still being in a position to change to a low rate mortgage product before completing, then a majority of them vanishing over March/April (during my ERC period).
It is interesting that you say lenders are providing products that run at a loss, I did not know that. Has the base rate being reduced not helped?

blue_max_3

MovingForwards said:

@blue_max_3 lenders do stipulate minimum mortgage loans in their criteria. It still costs them money to process applications eg pay wages / overheads etc.

They used to manage just fine before they decided to do this. Like we'll all end up paying for current accounts once the banks think they can get away with it. Then the cartel all join in and it becomes the norm.

jenks48

Deleted_User said:

Valuers cant get in to properties.  Without a valuation then a mortgage cant be agreed.  No lender wants to have thousands of half approved mortgages awaiting processing and no client wants to have a maybe yes/maybe no answer when they are trying to buy a house.   

Once valuers can get back to properties then mortgage products will flood back to the market

regard the actual rates.   A lot of lenders were already making a loss on mortgage products when the base rate was 0.75%.   Add an uncertain market, increased joblessness, more arrrears on current mortgage deals in the future,  less certainty for future business coming through.  Its no wonder lenders have increased rates.  No one wants to lend money at a loss then lose money further if the client goes in to arrears due to the economic worries. 

There are a thousand more variables to mortgage pricing than 'BoE rate low = mortgages should be low'

Do you have any idea where I would stand re new morgage application submitted 9th March offered 20th March having technical issues printing the morgage but happy to approve I went and paid the searches because they confirmed offer with broker by email as soon as they could sort the technical issues they would print..seems now Barclays are saying not the case.
A nightmare too for myself I have no idea where I stand.

Thrugelmir

blue_max_3 said:

MovingForwards said:

@blue_max_3 lenders do stipulate minimum mortgage loans in their criteria. It still costs them money to process applications eg pay wages / overheads etc.

They used to manage just fine before they decided to do this. Like we'll all end up paying for current accounts once the banks think they can get away with it. Then the cartel all join in and it becomes the norm.

Free banking is very much restricted to the UK. The cost of the service provision is of course borne by borrowers.  The levy that protects savers deposits is likewise paid by borrowers. There's no such thing as a free lunch.