One word...chaotic

Cameron McLean
September 27, 2022
One word...chaotic

The 27September was chaotic, that’s the onlyword I can use to describe how it felt when over 300 mortgage rates were pulledwith little to no warning.  Followed bylenders.


So many lenders withdrew from the market with very little notice.  All we got was an email at 4.45pm advising we had till 8pm to make our submissions.  Which can be challenging when calling clients at that time to get all the documents and the offer accepted by the seller.


For those whose applications are already in with a lender, the lender will honour the rate applied for and work through those applications.  Our team will continue to do the best for our clients (thanks Cherelle and Gail, our awesome Admin Team).


It’s not the end of the world and I feel fine about it (to quote REM).  It’s temporary and the interlending rates (banks loan to banks) are causing issues, sparked by the crash in the pound.  There will be a period of adjustment which means little to no lending. The banks have reacted to the pound crashing in a fairly standard manner. There is still an appetite to lend but the uncertainty caused by the drop in in the pound has made the major players twitchy.  My view is that this is also a reaction to the mini budget, with the Government and the Bank of England going in opposite directions.  The financial market wants to know details about the borrowing for the proposed governments pending (something we all dearly wish to know as well).  Essentially this has poured fuel into an already raging fire.  


But how does this effect our clients?


Sadly this reduces the amount of choice of mortgage rates available.  We’ll see higher interest rates but the banks don’t want to put interest rates up to 6%.  However we currently  have mortgage rates at 8% and one lender is offering 9.1% at 80% LTV over 2 years, this particular product is for clients who may have missed a few payments on loans.  That’s an eye-watering interest rate.


With inflation at an all-time high and the soaring cost of living, the Bank of England wants to use high interest rates.   If you're currently on a fixed rate deal, your mortgage payments will not be affected. If you're on the standard variable rate or a tracker, then you'll already be familiar with the increases. Whilst there are less deals (for now), it doesn't mean you can't explore your options. You can secure a remortgage deal six months before your current one ends. Should rates improve before the six months is up, we can source a better rate again.


What are we saying to our clients? 

Remain calm, take a breath and speak to your mortgage and protection advisor.  I would like this time to be used for Lenders to catch up on their existing applications.  We’re still experiencing long underwriting/processing times without any real reason given.  I personally feel this is a hangover of the pandemic where workforces were cut, early retirement happened and the current workforce is understaffed and undertrained.


Myself and the team will keep abreast of the latest mortgage rates, continue to tailor our advice to our clients and use our knowledge and expertise to guide them through this difficult time.  


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