Not for the first time, there are plenty of inaccuracies and misinformation circulating in the Press, this time regarding mortgage products, which we feel it’s important and hopefully helpful to address.
A clear distinction must be made between the term ‘mortgage offer’ and ‘mortgage product’ in order to understand what has happened in the mortgage market this week and avoid unnecessary panic.
Mortgage Product:
Mortgage loans marketed by lenders on a variety of terms, which potential borrowers are encouraged to apply for, and for which they will need to establish some level of eligibility either directly with the lender or often through a mortgage broker.
Mortgage Offer:
Confirmation of acceptance of a borrower to use and rely upon a particular Mortgage Product in order to fund a particular property purchase, once the application process has been completed and thorough eligibility checks are undertaken and approved.
What we’ve seen this week is disruption in the Mortgage Products available for potential borrowers to apply for. As far as we are aware lenders are not withdrawing Mortgage Offers which have already been issued and which Borrowers are looking to rely upon for imminent purchases.
Mortgage Products change all the time and it is not surprising to see a lot of change when interest rates are moving.
In the context of this unsurprising disruption, a lot of media outlets are incorrectly (and irresponsibly) referring to Mortgage Offers being pulled on mass. This is unnecessarily spooking borrowers who have already found a property, been approved for mortgages, and are hopeful of concluding their purchase very soon.
Is it possible for lenders to withdraw Mortgage Offers?
Technically yes, but only in accordance with the terms of the offer, which usually refer to a change of circumstances of the borrower or a problem with the property in question. Borrowers with Mortgage Offers are encouraged to check their Mortgage Offers and consult with their mortgage broker and/or solicitor for clarity.
(Please note an Offer in Principle is not a final Mortgage Offer – this is usually available at a much earlier stage and would not in any market conditions be relied upon to exchange contracts).
Sam was educated at the University of Sheffield as well as Griffiths University in Brisbane, Australia. He gained professional experience in London real estate before joining PCB in 2012. His specialisations include: overseas investors purchasing new and established property, real estate finance and commercial property investment work.
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