Mortgage rate increase during application

annasud

Hi all,
We applied for a mortgage through a broker with HSBC - the rate when we applied was 1.76% but they've just sent us the offer and apparently the initial rate that we applied for has expired and they've offered us a rate of 2.29% which is their current rate for a 5 year fixed mortgage. Our broker says its rare that this happens but there is nothing we can do about it. We are trying to understand how this could happen as we thought that the rate was fixed at the date of application. It took them a very long time to review the application (we applied on the 23rd Feb, so almost 2 months ago), can they do this? Any advice would be great!

K_S

@annasud The rate/product is 'reserved' when the broker clicks submit on the full application on the HSBC portal. Is that what you mean by "we applied on 23rd Feb"?

annasud

Yes that is what I meant - at least I believe she clicked submit the full application on that date, that's what she said she was doing anyway! We obviously have to double check with her exact dates that everything happened to understand how the rate could have changed as that date she submitted the full application she had also confirmed with us that the rate we were quoted when we applied wouldn't change but now it seems to have.

K_S

@annasud I can't recall a case where the specific product was changed by the lender on an application AFTER a full application was submitted on the lender portal. I'm not saying that this did not happen in your case, as there might be other relevant information in the background.

This is what HSBC sends to the broker when products are being updated.

The answer probably lies in the delay from 23rd Feb (when you were told the application went in) and now when you've been told that the rate is no longer available.

It could be that the case was passed to an admin team (most of the larger brokers have separate teams for keying in and submitting applications, its not the broker who does it) for keying on the 23rd Feb and it fell in between the cracks somewhere.

annasud

Ok, thank you, Ill try to speak to our broker to find out if that is what has happened or whether there was something else in the background of the approval process. I dont think there is much I can do about it now as all of the rates are higher and at least we have a mortgage approved! But we would consider complaining if it turns out that they didnt submit the application when they said they had.

simon_or

Sounds to me like someone at the brokers has dropped the ball along the way. Their explanation doesn't make any sense. Might be one of those conveyor belt factories where the application is passed on between multiple different people through the process.

I would definitely try to get to the bottom of this, specifically when was the application submitted. You can even ask for a copy of the application form, perhaps that will have the product that was applied for.

annasud

@K_S @simon_or 
Ok, thank you, we will make sure we find out. It does seem like someone hasnt submitted the application when they said they had and this is why we now have a higher interest rate which is obviously very annoying! Do you think we'd have grounds to complain if this turns out to be the case? Its going to cost us quite a lot of extra money over the course of the 5 year fixed term.

annasud

Just in case anyone is interested, we got to the bottom of it!
So turns out our mortgage broker did submit the application when we thought she had but the product she had applied for was only available to HSBC account holders which we are not. So when it came to review it HSBC discovered we were not applicable for that mortgage and put us onto one which is for new customers with the rate that was available at the time of their review (which had increased since our application was submitted). So our mortgage broker did make a mistake but I'm unsure exactly how much it has cost us as the rate we thought we would get was never applicable for us anyway. 
Our plan is to go with the mortgage we have been offered as the rate is still one of the best around at the moment and wait till we have completed and then make a complaint to see if we can get some compensation for the error.

K_S

@annasud That makes sense, sounds like the application wrongly went in for a HSBC Premier product. If it helps, the difference in rates is around 0.03-0.05%.

So if the Premier rate you applied for was 1.76%, the equivalent standard rate at the time would've been around 1.79%-1.80% or so. There might also have been a difference in the product fee which makes the gap slightly larger/smaller.

I can't tell you whether to complain or not and how they'll handle it, but you have definitely lost out due to the error and it seems (from the limited info in your post) that the mistake was primarily at their end.