UK banks suspend mortgage deals as borrowers rush to fix rates

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UK banks are mortgaging in a short time and are struggling to process a large number of applications, which leaves borrowers frustrated if they rush to fix rates before they rise again.

Lenders are rapidly raising mortgage interest rates, causing brokers to fill out customer applications before products are withdrawn or replaced. Financial site Moneyfacts reported that the average maturity of a mortgage deal last month fell to a record low of 21 days.

Adrian Anderson, director of broker Anderson Harris, said: “We are accepting applications as quickly as we can because rates are being withdrawn in a very short time and are growing quite rapidly. Now is a very troubling time to be a buyer or a mortgage broker. ”

According to him, most lenders went five or more working days to evaluate the applications of home buyers and borrowers who want to re-mortgage – a process that would normally take one or two working days. Some banks warn that the process will take much longer.

Simon Gamon, managing partner of broker Knight Frank Finance, said the time between agreeing a bet and withdrawing money has “increased” over the past two weeks.

“Borrowers’ advertisements to secure a mortgage loan before interest rates rise further create a huge burden on lenders.”

He said that banks are withdrawing some products not only for reasons of revaluation, but also as an active way of sustainable flow of applications. “It simply came to our notice then. . . reviewing or removing pieces of their range at one time to maintain the level of service ”.

Chris Sykes, technical director of the broker Private Finance, said this week that he sent a client seeking a loan of 600,000 pounds, three quotes from Barclays, HSBC and Accord. Within three hours, all three lenders sent an email announcing the relevant mortgage deals and raising rates. “Any increase in the rate on this loan is actually a big chunk of money,” Sykes said.

This week HSBC told brokers that applications would be processed within 10 business days. Asked about the delays, he said: “The current assessment time is within our normal level, which fluctuates according to the volume of business.”

Santander said he had given birth to the capacity to manage the extra volumes. The average term of the mortgage offer was 17 days.

Nationwide added that it seeks to respond to and process applications as soon as possible. “Our current average terms are what we expect given the high demand we see in the market.” As of Friday, the average number of business days from filing an application to a standard mortgage offer was 14 days.

Hodge, a specialist lender, gave 16-17 business days as the time required for “fully packaged applications”. On his web pages for mortgage brokers, he said: “We are currently getting large volumes of business along with the absences associated with Covid-19. Despite the fact that we are doing our best to meet the above deadlines, there may be temporary delays. “

The Bank of England has raised its key interest rate from 0.1 per cent to 1 per cent since December. According to the Bank of England, rates on two-year fixed-rate transactions for individuals with a 25 per cent deposit have almost doubled from 1.2% in September to 2.35% at the end of last month.

The Bank of England has warned that inflation could reach 10 per cent, raising expectations of further rate hikes in the coming months.

TwentyCi, a consulting firm, said the time between agreeing to sell a contract subject to completion and completion has increased by an average of 12 weeks in March 2019 to 22 weeks in March 2022 – or more than five months to get a sale across the line. .

Delays threaten to disrupt housing networks, forcing buyers to insist on faster processing, fearing a failed deal. Those in the chain were particularly affected, as a failed or delayed mortgage application for a single buyer could disrupt the plans of several participants. “Sellers want people to exchange faster, but the problem is that all banks take longer,” Anderson said.

As a result, cash buyers have become more attractive to sellers because they avoid the mortgage application process and often do not have a real estate purchase chain.

“We are seeing more cash purchases through our agency partners,” Sykes said. “It’s useful because it can break the chain.”

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