Pete Thomson is sales and marketing director at The Mortgage Lender
In my last blog I questioned the chop/change nature of mortgage regulation and I reflected on the rate of change in the mortgage market. The feedback I’m getting suggests that the need for certainty is on a lot of people’s minds.
How often does a broker get an accepted Decision in Principle (DIP) and then select an available advertised rate only for their client to then get an offer on a higher rate once the lender does full underwriting?
I’m not talking about cases where valuations changed the lending profile, borrower circumstances changed or the DIP was incomplete. I’m talking about cases where the broker has done everything they can and nothing has changed for the client but the offer is at less attractive rate than at application.
The conversations I’m having imply that there are lenders for whom advertised rates seem nothing more than headline-grabbers to generate column inches and best-buy table appearances.
If what I’m told is a true reflection of some in the market and I’ve no reason to doubt that, the chances of you getting some of the rates out there, even if they were on the DIP, are somewhere between slight and non-existent.
Is this really treating customers fairly?
The Decision in Principle, Offer in Principle, call it what you will, should surely be as accurate as possible and only be amended or revoked in exceptional circumstances, or what is the point of it for a borrower? It becomes almost meaningless if its content can’t be relied upon.
If I were selling credit cards, the number of people that are accepted determines the rate I can advertise; I would be bound to use the rate 51% of people get. This system does have its flaws but it does also temper some of the use of rates that nobody really gets.
Now, fair enough, I don’t believe “representative APR” is the right thing for the mortgage industry, but I am hearing enough people say there’s a problem to think something isn’t working somewhere.
If it isn’t working, there could be a lot of disappointed borrowers who have accepted deals worse than they could have got elsewhere, which in turn undermines the value brokers’ knowledge can deliver.
And in case you were wondering, 98% of our offers received the product tier they originally qualified for or better.