Lenders are being urged to taper discounts on mortgages in light of the current economic climate.
Specialist lender CHL Mortgages says offering deeply discounted mortgage products at this time may not be treating customers fairly (TCF) and represents poor risk management. The firm argues the greater the discount, the greater the “payment shock” for the customer when the special rate ends, pointing out 1.4 million customers are expected to come to the end of their deals in 2008. Jannie Vermeulen, head of credit risk at CHL Mortgages, says: “The problem with discounted products, especially those that are deeply discounted, is the assumptions that come with them. “These products are des...
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