Risk of Offers being withdrawn?

simps100

Hey

I am currently remortgaging my property to a 5yr fixed, I have a mortgage offer all agreed which will expire in early January, I’m planning to complete early December just after current early repayment charge with my current lender expires.

But in the back of my mind with energy prices going up, interest rates rising and the possibility of property prices falling I’m worried if lenders will start to look at offers and withdraw them if things get bad?

My ERC is around £2k, I’ve seen some suggestions lenders may sometimes waive this in the last 3 months but it seems very unlikely.

I know it’s impossible to tell what will happen - but I guess what i‘m after is reassuring that i’m probably worrying over nothing and banks won’t start to withdraw offers or is it worth some consideration trying to complete earlier and swallowing the charge?

K_S

@simps100 I can't say that it's never happened or that it'll never happen but I've neither experienced lenders withdrawing offers simply due to changes in interest rates/inflation nor heard about it anecdotally in industry forums.

I've had plenty of clients recently complete on purchases and re-mortgages at rates of sub 1.5% where I'd submitted applications early this year when rates were much lower. The same rates now would be around 3.5-4%. Lenders will have earmarked traches of funds at the rates that they secured back then, so they're not losing money simply because rates go up during the 6 months of the mortgage offer.

dunstonh

I know it’s impossible to tell what will happen - but I guess what i‘m after is reassuring that i’m probably worrying over nothing and banks won’t start to withdraw offers or is it worth some consideration trying to complete earlier and swallowing the charge?

It is rare but it has happened where to those that were pushing limits at the original lending criteria but after a change in lending criteria were considered too far over the line.   Tends to happen only in extreme, sudden and unexpected changes in the economy.  It last happened during the early months of the credit crunch.   It is not down to interest rate changes though as those deals are funded.

ACG

I became a broker after the last recession. But I did work in the industry. I dont recall mortgage offers being pulled because of a change in the economy. 
I think one lender pulled offers when Covid hit, but that same lender appears to also be struggling to get business in now... Offering higher proc fees, lower rates etc. So I think lenders may think twice about pulling offers. I know I would probably take the lender off my list of lenders if they did that and they would never get another case off me again. 

Nobody can say it wont happen, but if I was a betting man, I would say it is unlikely. 

dunstonh

I became a broker after the last recession. But I did work in the industry. I dont recall mortgage offers being pulled because of a change in the economy. 

We had a number of posts on this site during the credit crunch where people who had the offer letter were contacted before completion to run it through underwriting again and got the mortgage pulled.

From memory, a lot of it was from the sub-prime/near prime lenders that wanted to stop borrowing and withdraw from the market whilst there was the odd case (and it really was uncommon) from a mainstream lender.

ACG

dunstonh said:

I became a broker after the last recession. But I did work in the industry. I dont recall mortgage offers being pulled because of a change in the economy. 

We had a number of posts on this site during the credit crunch where people who had the offer letter were contacted before completion to run it through underwriting again and got the mortgage pulled.

From memory, a lot of it was from the sub-prime/near prime lenders that wanted to stop borrowing and withdraw from the market whilst there was the odd case (and it really was uncommon) from a mainstream lender.

But they were pulling offers because of changed circumstances rather than property values? 

dunstonh

ACG said:

dunstonh said:

I became a broker after the last recession. But I did work in the industry. I dont recall mortgage offers being pulled because of a change in the economy. 

We had a number of posts on this site during the credit crunch where people who had the offer letter were contacted before completion to run it through underwriting again and got the mortgage pulled.

From memory, a lot of it was from the sub-prime/near prime lenders that wanted to stop borrowing and withdraw from the market whilst there was the odd case (and it really was uncommon) from a mainstream lender.

But they were pulling offers because of changed circumstances rather than property values? 

No.  It wouldn't be expected either as the tranche would be funded.  In the past during rising interest rates, particularly back in the double digit days, deals would be pulled early if they were particularly attractive. It would be a race to get the offer letter and sometimes the deal was pulled before the offer letter was generated and the person had to pick a new deal.  

simps100

Thank you all have (mostly) put my mind at ease - I know it’s all out of my control but can’t help but to worry! 

I did talk to my current lender today regarding the early redemption fee - they said that I would be able to avoid the fee within the last 60 days of the term as long as I was to pay of the interest due up to the end of the current offer, which would actually allow me to complete a couple months earlier than I thought if I’ve understood that correctly so will discuss this with my solicitor and hopefully do that!