Lenders have increasingly come under fire these last few weeks for increasing rates, tightening lending criteria, pulling products and more recently adding fees for deals left right and centre. 

Bridging and Commercial asked you the broker community how you felt, whether banks are acting too harshly.

These were the responses from two brokers –

Mortgage lenders are continuing to increase interest rates and tighten criteria on new borrowing. There are no signs of this trend abating.

Anybody who has a mortgage deal expiring within the next 9 months should be very concerned. Many people are due to come off deals where they have been paying less than 5.50% and in many cases less than 4.99%. They can expect a huge increase in payments and should take advice as soon as possible. An added problem that is being experienced in the mortgage market at present is down valuation of properties. This is impacting on remortgages in particular where the original mortgage was over 75% of the purchase price 2 or 3 years ago. These properties are often being valued by lenders at no more than the original price and in many cases less. This is resulting in a problem of remortgage availability and the old "fee-free" deal becoming more difficult to find.

The outlook remains bleak with a further raft of mortgage lenders increasing rates this week

In respect of the comments made by Alistair Darling and the fees that are applied to mortgages, I think he needs to turn his attention to more pressing issues like supporting or finding a solution in the return of the other lenders that have disappeared from the market place. Whilst I agree that the fees are becoming higher, they are generally offset by giving the client a better rate of interest and this can vary according to the level of borrowing the client is taking. A simple true cost calculation confirms this and I can’t see this changing for some time.

The Pressing issue is, without these other lenders returning to the marketplace, the large lenders are going to continue to profiteer and charge what they like and throw away/discard the clients the don’t want. Lenders are pulling rates so fast from mortgage sourcing systems as they don’t want to be top of the pile or they get inundated with cases and enquiries. When the client or indeed the mortgage brokers had more to source from, the lenders were competing for the business, not any more, now they are trying not to be best…! Watch this space when the reports of the bank profits are going to be announced…. There will be Billions – not Millions!

Does Alistair Darling (or any one else for that matter who can do anything about it) not see that if these other lenders do not return to the market, there will be significant issues in respect of clients exiting short term mortgage deals from the adverse or quirky lenders books and stepping on to an increased and potentially un affordable variable rate. This will have a detrimental impact on the housing market and the economy, repossessions will be increased and spending will be down.

While I am on my high horse…..I can see that the new deal that Northern Rock and Lloyds will leave Northern Rock holding the high risk and high level borrowing, Lloyds will surely not take the full package, it’s just the cream they are after. Oh and not to mention the brokers introduction of the client to Northern Rock in the first place, will the brokers have a look in to advise the client again to see if the Lloyds is the best option for them, I think it highly unlikely – don’t you? So again we as the brokers have been left out in the cold!

I know that this e-mail is probably not exactly going to make the right waves to resolve this horrendous mortgage market we are within, but it certainly helps me to get it off my chest!