Client decision-making is becoming critical as pricing shifts mid-application
A sharp increase in mortgage product withdrawals and repricing is forcing brokers into a more reactive advice model, as lenders respond to rising funding costs.
In the last 48 hours alone, almost 500 residential mortgage products have been withdrawn as lenders adjust pricing in response to market volatility.
The pace of change is creating operational pressure, with product availability shifting rapidly during the advice process. Graham Taylor, of Hudson Rose, said the past few weeks had been particularly challenging.
“The past couple of weeks have certainly been challenging from an advice perspective. With repeated repricing by lenders we have had to make sure we are on top of the withdrawals and communicating these to affected clients. Most are able to act quickly and secure the recommended product but, as is always the case, others are unable to do so.”
That dynamic is increasingly being felt at client level, where delays in decision-making can quickly translate into higher borrowing costs.
David Titherington, of The Mortgage Station, said products are often changing before clients are able to proceed.
“A lot of the time the client needs to go and speak to their partner to make a decision and by the time they’ve made their mind up pricing has changed. I had one recently, a couple wanting to raise funds for an extension, it took them about a week to decide on length of term etc but by the time they’d made a decision rates have increased quite significantly and they’ve decided to hold off for the time being.”
That shift is also influencing how advice is being delivered, with brokers placing greater emphasis on speed and execution.
“I’m now emphasising the importance of speed of decision making in the current climate,” Titherington added.
Securing a rate early is increasingly seen as a form of protection against further volatility, even where the market direction remains uncertain.
“The advice remains to secure a rate at today’s pricing as there is no knowing when the market will settle down or if rates will increase further,” Taylor said. “We reassure our clients that we will reassess the market again before they exchange or complete so that they are able to take advantage of rate reductions should these occur post application whilst protecting them should rates continue to rise.”
Different pressures in later life lending
While mainstream lending is being driven by short-term swap movements, later life products are responding to a different set of funding pressures.
Andy Shaw, of SPF Private Clients, said lifetime mortgage pricing is more closely linked to longer-dated government bond yields, which have risen sharply in recent weeks amid market volatility driven by the ongoing conflict involving Iran.
“Lifetime mortgages, by definition, are a longer-term product, so those aren’t really the metrics by which you look at things,” he said. “In fact, the closest barometer – albeit not an index that you follow directly – is the yield on 15-year government gilts, which have taken a battering since the start of the war.”
That shift has fed directly into pricing, although the market itself remains open.
“There are no lenders in the last few weeks who’ve completely withdrawn from the lifetime mortgage marketplace, but rates have gone up, and in some instances fairly spectacularly. There’s still stuff available, fixed for life, under 6.5 percent, which in an historic context isn’t devastating as an interest rate.”
Split borrower behaviour emerges
Rising uncertainty is also beginning to influence client decision-making, with brokers reporting a growing divide in how borrowers are responding.
“What we’re seeing is either people saying, ‘This world is too uncertain, we don’t know what’s happening next, we don’t need to act, we’re not going to act,’ or the other end of the spectrum, where people are taking the view that the world is so uncertain that actually having something that is inherently certain and fixed for life, and securing your mortgage finance now and future-proofing forever, is quite an appealing proposition,” Shaw said.
That divergence adds another layer of complexity to an already fast-moving market, one where pricing, product availability and client sentiment are all shifting at speed.
