Mortgage provider MPowered will no longer be providing any new mortgage lending which brokers have warned could risk creating mortgage prisoners.
MPowered said this decision was made to allow MQube, its fintech parent company, to take the lender’s technology on to a “global stage”.
As a result, MPowered will stop accepting new mortgage applications from today (October 28) at 5:30pm.
Pete Mugleston, managing director and mortgage adviser at Onlinemortgageadviser.co.uk, warned this decision could have dire consequences on its customers by potentially trapping them on higher rates.
“If your lender shuts up shop and doesn’t offer product transfers, you could be stuck on a higher rate with nowhere to go,” he explained.
“We call this becoming a ‘mortgage prisoner’.”
Mugleston said customers should think beyond the headline rate when choosing a lender.
“A big established lender might not always be the cheapest, but they’re usually more stable and less likely to leave you stranded down the line,” he said.
In response, a spokesperson for MPowered said: “Throughout this transition, borrowers, intermediaries, and distribution partners can continue to expect the same high level of service and support that has defined MPowered from the start.
“We will no longer offer Product Transfers and would encourage brokers to look to find their customers a new suitable offering as/when they approach the end of their fixed rate period.
“Where this isn’t possible, we will work with the customers on an individual basis to find a solution, so where possible, they avoid going on to SVR at the end of the fixed period.”
Narrows choice for borrowers
EHF Mortgages managing director, Justin Moy, said seeing any lender move from the market narrows the choices for potential borrowers.
“We haven’t seen a huge amount from MPowered recently, so it shouldn’t cause any significant problems,” he added.
Moy suggested existing borrowers should get in touch with their broker and make sure they are in a position to refinance elsewhere when required as, at time of writing, no one has indicated they will take over the mortgage book.
Meanwhile, Lawson Financial director, Michelle Lawson, pointed out that this is not an uncommon occurrence, stating there have been “quite a few recent buy outs and amalgamations”.
She warned this will mean more streamlining and cost savings to come.
“These decisions are not made lightly but there could be some borrowers left high and dry with this decision from MPowered to not even offer product switches or to transfer the business to another lender.
“These are considerations that we can take as advisers but often after the advice and later on the line as we aren’t privy to such negotiations until the deal is sealed.”
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