Molo Finance revises existing mortgage offers and completion dates due to funding issues

Specialist buy-to-let lender Molo Finance has contacted brokers and clients to change their existing mortgage offers and postpone their completion dates, citing changes in market conditions that have increased its funding costs.

According to sources, the lender-which temporarily suspended its buy-to-let lending last week-evaluated offers that were due to complete this week, and reassessed its rates and arrangement fees.

The lender gave brokers and clients the option to continue with their application using the updated products or to cancel their loan.

The revised products are subject to different interest rates and product fees, which in certain instances has made them more expensive.

Molo said loans for those who did not get back in touch by the deadline of 4pm 3 May to confirm a new mortgage offer or to cancel, their loan application would be automatically declined.

The lender has also paused all completions until this Friday, which will allow it to drawdown the required money from their funders.

Molo Finance said that it had been hit by increases in its funding costs due to rising inflation and the Bank of England’s base rate. It said certain costs which were interest rate-related rose by over 550 per cent since the start of last year.

Anonymous sources said it was unusual for lenders to alter terms of an offer due to funding issues, although some noted that during the first lockdown some lenders had withdrawn their pipeline and offers due to market uncertainty rather than problems with funding.

One broker said that most lenders would close the door to new applications, but changing existing cases was “not great and does not show forward planning”.

Another broker said their only option was to select the new rate or rebroke to another lender where possible, which was very challenging. They added that it had caused a lot of customer frustration and upset as it was so close to the completion date.

One adviser said it caused them added strain to work out whether the new proposed Molo deal, funding a new deal altogether or securing a bridge was the best option, and it placed huge pressure on their advice.

Another source said that it could lead to clients being unable to buy the property as the costs would be higher.

Others said that there could be lasting damage to the lender broker-relationship for those who had offers withdrawn while brokers who had not yet used the lender could be dissuaded from doing so.

Molo Finance declined to comment.

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