Trade bodies IMLA and AMI have partnered to produce an online guide to understanding lender funding, product pricing and availability for mortgage professionals, in light of the recent and ongoing interest rate volatility, the impact on mortgage product availability and consequent pressure on advisers.
The guide explains the different types of funding used by mortgage lenders and how the type and split of funding sources impact individual providers’ ability to respond to interest rate changes.
It answers questions such as:
- How are fixed-rate mortgages funded, and what is a swap?
- Why can some lenders offer more notice of product withdrawal than others?
- Can product withdrawal deadlines be kept within the 9-5, Monday-Friday?
- What would happen if a 24-hour product withdrawal notice period became mandatory?
- What needs to happen next – what can lenders and brokers do?
The guide is designed to be accessible for anyone in the industry and assumes no prior knowledge. The explanations come from technical specialists in the lending sector.
Robert Sinclair, chief executive of AMI, said: “Interest rate volatility is the new normal, and unhappily it is causing a great deal of stress and difficulty for advisers and their clients. In this environment, understanding the rationale behind mortgage pricing and product availability can give brokers valuable insight to help their customers make good decisions.
“That is why we at AMI and IMLA have come together to create this Q&A guide. In addition, we will continue to talk to lenders and other trade bodies about reasonable notice periods for product withdrawal.”
Kate Davies, executive director of IMLA, added: “We hope this guide will clarify the motivations and constraints lenders are operating within, and promote better understanding between lenders and brokers. It is essential we evolve as an industry to meet the demands of a shifting financial climate, and to that end, we are calling on all parties to maintain open dialogue.”