Since the credit crunch hit we’ve seen lenders adopt many different ways of distributing mortgages. There’s been tranche lending, the gradual return of exclusives and semi-exclusives, and obviously the dreaded reliance on high street lenders’ branches offering deals direct to consumers.
Last week we saw a new addition to this list – lenders providing limited release deals. The reaction from brokers to these week-long mortgage offers has been decidedly mixed.
Some have appreciated the rates while others have bemoaned the fact that clients only have a limited time to take advantage. For consumers it makes securing a top-notch deal even harder.
The reasons behind it are clear – lenders can increase business volumes in a short time, an increasingly difficult task when underwriting criteria has been tightened so drastically. One-week deals mean lenders can boost volumes safe in the knowledge that the plug will be pulled seven days later. Slashing prices and one-week sales work for retail stores and, love it or hate it, this looks set to become a feature of the mortgage market as well.
Meanwhile, it was great to see the Council of Mortgage Lenders’ warning that the Mortgage Market Review will be a disaster for borrowers hitting the headlines in the national press last week. The trade body spent most of the summer mobilising the lending community to make a concerted fight against the proposed changes from the Financial Services Authority.
But to truly have any impact it needs consumers to understand what the consequences of the restrictions on lending will be.
Housing minister Grant Shapps still insists that the age of aspiration isn’t over, but the MMR is on track to make property ownership a fantasy for many.