Mortgage lender Market Financial Solutions has defended the mortgage rate rises amongst lenders, saying their hands are tied due to the rapid rate of Bank of England base rate rises.
The Bank has raised rates 13 consecutive times, as the latest increase of 0.50% put the base rate at 5%.
The lender commented amidst major mortgage lenders meeting with the Treasury on Tuesday to discuss how they are helping customers.
Paresh Raja, chief executive of Market Financial Solutions, said: “Lenders cannot be blamed for increasing rates; their hands have been forced by the 13 consecutive hikes to the base rate, with more expected. Where there will be scrutiny, however, is the frequency at which rates are changing and products are being pulled.
“It is no surprise that borrowers – and brokers, it should be acknowledged – are experiencing stress over securing a mortgage for a property purchase. They must feel as products are here one minute, gone the next.
“Lenders can combat this issue by offering greater assurances over how long a particular product will be available for applications, and generally improving their communication with regards to how they are navigating the current economic landscape. This is where more agile lenders in the specialist finance sector seem be excelling, and it is no surprise that bridging loan applications have experienced an uptick in demand in 2023 amid a somewhat chaotic mortgage market.”
At the meeting Nationwide and Lloyds both played down the impact of rising rates, saying arrears are still at a low level.
Henry Jordan, home commercial director at Nationwide Building Society, told the Treasury Committee that its mortgage rates are typically increasing by £235 per month when customers remortgage.
And Andrew Asaam, homes director at Lloyds Banking Group, told the MPs: “As we look at the impact on arrears and forbearance and repossessions, very similar to Henry, we saw an uptick but arrears remain very low in a historical context and still below what we’d have seen pre-Covid.”
