Battered, bruised, bewildered, bloodied and bowed by the blistering barrage of rate changes — that’s the only way to start this month’s column.

As brokers we take a lot — and a reminder I write this as a broker — but the recent movements in swap rates, where a move of 0.2% in a day is a major shift, has caused lenders to engage in a long game of leapfrog as they battle to move as far down the pop charts as possible, rather than upwards.

With the press hot on the heels of every rate announcement, and a new obsession with the ‘average’ two- and five-year fixed rates that literally considers the whole spectrum of rates and screams that mortgages are higher than they are, coupled with some frankly pretty irresponsible commentary from some in the property market for their own publicity — it’s no wonder people are panicking.

Surely raising rates any further is pointless

It doesn’t help that we seem to have a panicking governor of the Bank of England, with the Bank yet again playing catch-up for what it should have started much earlier and no doubt about to go too far; as well as a government that seems to be content to watch the Bank employ the well-measured ‘shit or bust’ approach to trying to get inflation down, without so much as a helping hand or other tactic in sight. It does seem all a little rudderless.

I am not saying I could do better, but surely raising rates any further, and certainly over 5.5%, is pointless unless they figure a sharp crash and recession is the only option. Hammering the same group of people while they are already screaming for mercy is just vindictive.

Taking a toll

The toll it is taking on all of us is immeasurable, with many long days, evenings lost, and family time pushed to one side as we battle to look after our clients.

This job has never been easy — it is one of the things that actually attracts me to it — but f*** me, it’s tough at the moment. Explaining to clients, who are already nervous, that rates are disappearing so quickly, so regularly, is extremely difficult.

I would like to see people get proper advice before they do things like change their term length on an un-advised basis

I know my mental health has taken a battering. Let’s face it, we have been through quite a lot in the past few years and I am not ashamed to say I struggle sometimes. But I do worry about you lot. I really do.

I know it is not popular, but I have some sympathy for lenders. The amount of applications they are receiving is extraordinary. No wonder they are trying to protect their systems and people, as well as price sensibly in a market where movements are faster than a Nigel Farage excuse.

Better way

That said, lenders, surely there is a better way. Don’t give us two hours’ notice or less. I’m not saying you can all give us 24 hours’ notice. I know how it works and have heard and can see what it means for you.

It is more complex than just service, or profit, and has a lot to do with regulation and sensible lending and we can’t afford our banks to just lose money willy-nilly; that would be even worse.

There are sensible moves around a moratorium of 12 months before repossession

Can we at least have a ‘midday latest’ rule and then a close at 5pm or 6pm? Or an honouring of anything DIP’d with time to package and submit? Again, lenders, I understand even this could be problematic, but it’s a start. Maybe it would calm the rush and lead to better-quality applications that didn’t clog up the system.

I can also see the stresses this puts on lenders (as well as brokers) — good people caught up in this like all of us, and we must direct any ire in the right places (government and Bank of England, in my view), rather than just shout angrily like a baying mob with pitch forks. We are better than that and mental health is important for brokers and lenders alike.

I also appreciate it is harder for some of the bigger players, which get really hammered if things move suddenly, and some lenders are exposed to market movements more than others.

But it would be great to get those who can around a table to discuss what we can do to make it easier, not just for them, or for brokers, but for the clients who are all the alliterated B’s at the start of this column, and more.

Lenders have just had the wonderful Mortgage Charter thrust upon them by a government desperate to say, ‘Look at how we are helping!’

The Consumer Duty demands we come together to find a better way. So, to those lenders that feel they could do something different and want to discuss this, let’s have a parley. My place, I’m paying.

Affordability

The big issue we also need to address is affordability. As variable reversion rates get higher, some lenders seem to be stress testing at over 9%. Is that necessary? Do SVRs really need to be that high? Surely we should start to see something happen on reversion rates to reduce this.

Sensible people know a property price correction is needed, but a correction, rather than pushing things to breaking point. I’d argue those who are taking a mortgage now, especially new borrowers, are well placed to weather the years ahead so maybe we should allow them to borrow a little more rather than a huge amount less. This is why I am never likely to be offered a job in a risk department.

Lenders, can we at least have a ‘midday latest’ rule and then a close at 5pm or 6pm?

So, what of these mad swap rates? Well, three-month Sonia has risen to 4.35%, while swap rates have hit the stratosphere, back to the levels of the halcyon days of that comedy duo, Truss and Kwarteng.

Since the previous column (and brace yourselves):

2-year money is up 1.02% at 5.98%

3-year money is up 0.98% at 5.71%

5-year money is up 0.76% at 5.16%

10-year money is up 0.37% at 4.41%

Meanwhile, lenders have just had the wonderful Mortgage Charter thrust upon them by a government desperate to say, ‘Look at how we are helping!’

In essence it offers a pretty sensible approach. It’s just that most lenders were doing this to some degree and the way it will no doubt be publicised means there could be many borrowers who treat it as an ‘I may as well’ nice-to-have rather than a need-to-have. You will get one chance, people — don’t abuse it.

The whole green mortgage debate needs to go up a few gears if we are to get close to really changing the dial

I would also like to see people get proper advice before they do things like change their term length on an un-advised basis.

If, for example, a borrower who was initially advised by a broker switches term directly, has that negated the initial advice? Who is responsible if they keep that arrangement for more than the six months? That period is helpful but is it enough to make a fundamental difference to someone struggling who then goes back on to even higher payments afterwards?

It is scandalous that mortgage prisoners are not covered by the Mortgage Charter as the ‘lenders’ they are with are not signatories. Why they should be allowed to suffer even further is one of the travesties of modern-day justice.

We seem to have a panicking governor of the Bank of England

Rates do not look as if they will fall soon and, even if they did, it would be minimal. It looks like an average rate of 5.5% is here for the next year or two at least.

There are sensible moves around a moratorium of 12 months before repossession, and the fact that lenders will all offer product transfers (PTs) at six months, and must allow borrowers to move to a cheaper product if available up to two weeks before the end date, though this begs a few questions I don’t have room for here. The FCA has done well to change its rules so quickly, albeit some consultation would have been good.

Away from changes in rates, Accord has introduced joint borrower, sole proprietor to its residential range; Nationwide has tweaked its PT switching process; and Vida has revamped credit tiers across its residential and buy-to-let loans, and loosened its criteria.

An interesting Landbay report found that 41% of portfolio landlords were still looking to buy in the next 12 months, with demand from tenants the most over-riding factor. Seems there is life in the old BTL dog yet!

It’s no wonder people are panicking

Dashly has released some data on the average cost for homeowners to improve their energy performance certificate rating, standing at £13,981.87. The whole green mortgage debate needs to go up a few gears if we are to get close to really changing the dial.

Finally, the next time I write we will be into the new Consumer Duty regime, so it really is time to get those plans in order and crack on with the exceptional job you all do.

I wish you good luck. We are counting on you.

This article featured in the July/August 2023 edition of MS.

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