Are mortgage providers withdrawing offers?

peacheymarine

The telegraph and news night yesterday both suggested mortgage providers are withdrawing/reneging on written offers. I am not sure whether they actually mean agreement in principle rather than a mortgage offer which has been through underwriting. I would like to hear if anyone has had a mortgage offer withdrawn since Friday’s mini budget? 

Our situation is we have a mortgage offer but our current fixed deal ends and we plan to switch on 1 December, however the economy is hurting and we’re wondering whether we should pay the early redemption fee or sit tight and hope house prices don’t tumble enough to warrant the lender to reopen our underwritten offer. 

Advice please 

Edi81

If you have a written offer it won’t be pulled. 

The press are using terrible wording creating worry and confusion. 

MattMattMattUK

peacheymarine said:

The telegraph and news night yesterday both suggested mortgage providers are withdrawing/reneging on written offers. I am not sure whether they actually mean agreement in principle rather than a mortgage offer which has been through underwriting. I would like to hear if anyone has had a mortgage offer withdrawn since Friday’s mini budget? 

I think you might be slightly misunderstanding what is going on, the mortgage provider can withdraw an offer at any point right up until completion, it is very rare to do this after underwriting and even rarer to do it after exchange and usually only happens in cases of fraud. There seem to be a few cases in the news of them withdrawing agreement in principle offers for first time buyers, but if these were on a large scale then they would be far more prominent than they are. What they have done is withdrawn a lot of mortgage products from the market, so people cannot apply for a those new products and they are re-pricing the products that they leave on the market. 

peacheymarine said:

Our situation is we have a mortgage offer but our current fixed deal ends and we plan to switch on 1 December, however the economy is hurting and we’re wondering whether we should pay the early redemption fee or sit tight and hope house prices don’t tumble enough to warrant the lender to reopen our underwritten offer. 

Advice please 

The article in the FT expected the market to grind to a halt and that there would be a slow slide in house prices, rather than them crashing. If your offer is based on being under a specific LTV and you are very close to it and you still have to pass underwriting then there may be an issue. They could withdraw the offer, they might not, either way it is a gamble an no one can make that choice for you. It also depends how much you value the cost of an early repayment fee over piece of mind.

kingstreet

We have not seen any formal mortgage offers being withdrawn.

Lenders are withdrawing mortgage products where no full mortgage application has been submitted, they are not withdrawing formal mortgage offers.

K_S

peacheymarine said:

The telegraph and news night yesterday both suggested mortgage providers are withdrawing/reneging on written offers. I am not sure whether they actually mean agreement in principle rather than a mortgage offer which has been through underwriting. I would like to hear if anyone has had a mortgage offer withdrawn since Friday’s mini budget? 

Our situation is we have a mortgage offer but our current fixed deal ends and we plan to switch on 1 December, however the economy is hurting and we’re wondering whether we should pay the early redemption fee or sit tight and hope house prices don’t tumble enough to warrant the lender to reopen our underwritten offer. 

Advice please 

@peacheymarine Most of the people talking on the news and writing in the newspapers about developments in the mortgage market are mixing up mortgage-products, mortgage-offers, offers on properties, etc. even Estate Agents in some cases! 

I have not heard one instance of a mainstream lender, building societies, established specialist lenders, etc. withdrawing a full mortgage offer due to market conditions in the past week. This is something that would impact brokers greatly and I would have heard in industry forums if this had happened.

With a couple of super-specialist lenders (of whom you have probably never even heard of), I know that they have changed the offer from a fixed-rate to a variable-rate for some of the products that they issued a full mortgage offer on. I don't know if there is other relevant context to this bit of news.

I know its easier said than done, but honestly, I wouldn't stress about it.

dunstonh

The telegraph and news night yesterday both suggested mortgage providers are withdrawing/reneging on written offers.

Not helped by questionable information being accepted without scrutiny on the BBC.  Such as question time last night where someone claimed their mortgage offer went from 4.5% a few weeks ago to 10.4%.  Lots of gasps of shock but it was accepted as gospel and not challenged.

peacheymarine

Great to hear your views. Thank you 

BigBoss

What about pulling products that are in process of application?

waingels

MattMattMattUK said:

peacheymarine said:

The telegraph and news night yesterday both suggested mortgage providers are withdrawing/reneging on written offers. I am not sure whether they actually mean agreement in principle rather than a mortgage offer which has been through underwriting. I would like to hear if anyone has had a mortgage offer withdrawn since Friday’s mini budget? 

I think you might be slightly misunderstanding what is going on, the mortgage provider can withdraw an offer at any point right up until completion, it is very rare to do this after underwriting and even rarer to do it after exchange and usually only happens in cases of fraud. There seem to be a few cases in the news of them withdrawing agreement in principle offers for first time buyers, but if these were on a large scale then they would be far more prominent than they are. What they have done is withdrawn a lot of mortgage products from the market, so people cannot apply for a those new products and they are re-pricing the products that they leave on the market. 

peacheymarine said:

Our situation is we have a mortgage offer but our current fixed deal ends and we plan to switch on 1 December, however the economy is hurting and we’re wondering whether we should pay the early redemption fee or sit tight and hope house prices don’t tumble enough to warrant the lender to reopen our underwritten offer. 

Advice please 

The article in the FT expected the market to grind to a halt and that there would be a slow slide in house prices, rather than them crashing. If your offer is based on being under a specific LTV and you are very close to it and you still have to pass underwriting then there may be an issue. They could withdraw the offer, they might not, either way it is a gamble an no one can make that choice for you. It also depends how much you value the cost of an early repayment fee over piece of mind.

But it's also very rare for BOE base rates to be hiked at the level required to stem inflation/ unfunded tax cuts . If BOE hike 1%+ in November as expected what's stopping banks withdrawing the mortgage offers for what would be unprofitable mortgages they agreed to offer at low 2% levels?

[Deleted User]

dunstonh said:

The telegraph and news night yesterday both suggested mortgage providers are withdrawing/reneging on written offers.

Not helped by questionable information being accepted without scrutiny on the BBC.  Such as question time last night where someone claimed their mortgage offer went from 4.5% a few weeks ago to 10.4%.  Lots of gasps of shock but it was accepted as gospel and not challenged.

I read that as well and wondered what on earth it was about. No context to it or checking. I can only assume if it was true it was potentially a very adverse lender??! But even then it seems a stretch! Very irresponsible reporting.

kingstreet

waingels said:

MattMattMattUK said:

peacheymarine said:

The telegraph and news night yesterday both suggested mortgage providers are withdrawing/reneging on written offers. I am not sure whether they actually mean agreement in principle rather than a mortgage offer which has been through underwriting. I would like to hear if anyone has had a mortgage offer withdrawn since Friday’s mini budget? 

I think you might be slightly misunderstanding what is going on, the mortgage provider can withdraw an offer at any point right up until completion, it is very rare to do this after underwriting and even rarer to do it after exchange and usually only happens in cases of fraud. There seem to be a few cases in the news of them withdrawing agreement in principle offers for first time buyers, but if these were on a large scale then they would be far more prominent than they are. What they have done is withdrawn a lot of mortgage products from the market, so people cannot apply for a those new products and they are re-pricing the products that they leave on the market. 

peacheymarine said:

Our situation is we have a mortgage offer but our current fixed deal ends and we plan to switch on 1 December, however the economy is hurting and we’re wondering whether we should pay the early redemption fee or sit tight and hope house prices don’t tumble enough to warrant the lender to reopen our underwritten offer. 

Advice please 

The article in the FT expected the market to grind to a halt and that there would be a slow slide in house prices, rather than them crashing. If your offer is based on being under a specific LTV and you are very close to it and you still have to pass underwriting then there may be an issue. They could withdraw the offer, they might not, either way it is a gamble an no one can make that choice for you. It also depends how much you value the cost of an early repayment fee over piece of mind.

But it's also very rare for BOE base rates to be hiked at the level required to stem inflation/ unfunded tax cuts . If BOE hike 1%+ in November as expected what's stopping banks withdrawing the mortgage offers for what would be unprofitable mortgages they agreed to offer at low 2% levels?

Because the funding was already obtained and a set level of business permitted during the period the product was open to application. The lender arranges the rate swap in the money market and makes the same profit either way.