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Can lenders improve rate withdrawal processes and work with brokers?

Following the Bank of England’s base rate rises and the volatility in the swap rate markets, we have seen a huge volume of interest rate increases coming into the buy-to-let space over the last few weeks.

Whilst I’m sure that the broker community fully expected this, it does raise several concerns. With lenders giving increasingly tight deadlines to secure rates, customers can be faced with not being able to secure what was deemed as the best option for them.

This raises the question, are we being as fair to the customer as we could be?

At any one time, brokers will be working on numerous applications at varying stages of the mortgage process. In TBMC we will have applications to be keyed onto the lender’s system for decision in principle (DIP), DIP accepts awaiting information and supporting documents before submission, fully submitted applications waiting for the lender to issue an offer, and offered cases waiting to complete. All of these cases could potentially be affected by a rate pull, not simply the applications which are not yet on your desk!

The most common issue is the deadline given to carry out the DIP. We are increasingly seeing rates being ‘withdrawn with immediate effect’, with little or no time given to carry out a DIP. If you are sitting at your desk when the withdrawal email comes through and have one application which needs to be DIP’d this can be a simple task. However, the job of a broker isn’t that straightforward - it’s more likely you are out meeting with another client or perhaps have several cases which need to be processed. In these instances, the two hours given to DIP a case, for example, might simply not be achievable.

This can lead to some difficult discussions with customers, explaining that despite them completing their application before the rate was withdrawn, the product they had opted for is no longer available.

It would be fantastic to see lenders trying to alleviate this, perhaps by fund booking through the BDMs. Brokers would happily give the number of applications, loan amounts and customer names over the phone to secure the rate and then be given a longer period to key the case.

At the start of the pandemic, we saw a number of lenders not only withdrawing from new applications but also refusing to honour their pipelines of applications. This resulted in the mass re-brokering of applications and multiple disgruntled customers to deal with. With the uncertainty in the markets and many of the specialist lenders being wholly funded through the capital markets, there are concerns that pipeline business will be affected in a similar way.

It is safe to say there is full understanding of the need to withdraw and increase rates, we also all appreciate that things move quickly and so therefore must the lender. I think what we would all like to see, however, is an improvement on the lenders’ withdrawal processes and lenders and brokers working together to minimise the impact for customers.

In times of uncertainty and rising costs, I hope the specialist lending market can find a way to support and help our customers.

This website is aimed at mortgage intermediaries and investment professionals only and is not intended to be relied upon by borrowers or investors.

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The Business Mortgage Company Services Ltd is authorised and regulated by the Financial Conduct Authority (No. 302764) to transact regulated mortgages and registered as a Consumer buy-to-let arranger. The FCA does not regulate some investment mortgage contracts.