Lenders that won’t pass on cuts will accelerate arrears

I am concerned that consumers are only opting for trackers as the current wisdom is that interest rates are heading down.

But clients locked into trackers with high differentials above the base rate could face severe payment shock in the future. This cannot be ignored when giving advice.

What comes down can go up just as rapidly in these volatile times. We are seeing some better priced fixed rate deals and they should not be ignored when assessing long-term affordability.

The trend at the moment is for remortgaging clients to be offered attractive deals if they have over 25% equity in their properties.

When considered in light of falling valuations, this is logical as lenders are factoring in future prices.

But those not passing on the base rate cut to clients reverting to their SVRs are cutting their own throats as this will make arrears worse. Ultimately lenders will incur higher losses if repossessions are sought.

A saner approach would be to offer borrowers reasonable rates regardless of the LTVs they need to allow them to maintain repayments.

Lenders may fear the base rate dropping to an all-time low but they need to look at whether their pricing policies are going to make the situation worse.

And finally, can someone somewhere please convince the government to ditch Home Information Packs.

In a stagnant market they are of questionable value as they delay the house buying process.

I would back a new movement called CSA – the common sense approach.

Mary Lockyer

Mortgage Adviser

The Online Partnership

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