Nearly 300 mortgage deals have been pulled in the last 24 hours by banks and building societies, after a fall in the pound fuelled forecasts of a jump in interest rates to nearly 6%.
HSBC and Santander were the biggest lenders to pull mortgage products, with Bank of Ireland, Clydesdale Bank, Post Office Money and building societies including Monmouthshire also among the brands to have withdrawn products, as lenders struggle to price loans.
“We will be removing our 60% and 85% loan to value products for new customers and increasing other rates for new and existing customers from 10pm this evening,” said Santander in a statement. “Customers who have already applied by this time will not be impacted. We continually review the products we offer in light of market conditions.”
HSBC also temporarily withdrew its new business residential and buy-to-let products on Tuesday. In a statement HSBC said: “In order to ensure that we stay within our operational capacity, from time to time we need to limit the amount of business we can take each day. Our broker products will be available again tomorrow.”
Pound comes under new pressure after Bank of England fails to raise ratesRead more
Virgin Money and Skipton building society were among the lenders that said they were pulling their mortgage deals on Monday.
The country’s largest mortgage lender, Halifax, also said it was withdrawing its fee-paying mortgage products – in which borrowers pay an arrangement fee to secure a lower fixed interest rate – and moving to a full fee-free range from Wednesday.
“As a result of significant changes in the cost of funding, we’re making some changes to our product range,” a Halifax spokesperson said.
On Tuesday there were 3,596 residential mortgage deals available, 284 fewer than before the sharp fall in the value of the pound on Monday morning, according to the data firm Moneyfacts. At the end of last year would-be borrowers had 5,315 products to choose from.
Rachel Springall, a finance expert at Moneyfacts, said the market was extremely volatile and advised borrowers to seek independent advice to assess their best option. “The upheaval in the mortgage market may cause frustration among both borrowers and brokers as they see deals disappear overnight,” she said.
The overnight reduction in deals – the equivalent of a 7% drop – comes as lenders struggle to accurately price their products after last week’s mini-budget sent the pound and government bonds plunging.
Lenders price their mortgage interest rates against the Bank of England base rate, which was increased to 2.25% on Thursday. Before that, financial markets were forecasting that the base rate would rise to 4.5% by next spring as the BoE attempted to bring inflation under control.
skip past newsletter promotion
Sign up to Business Today
Free daily newsletter
Get set for the working day – we’ll point you to all the business news and analysis you need every morning
Enter your email address Enter your email address Sign upPrivacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.
after newsletter promotion
After Monday’s fall in sterling, that projected figure is now 5.8%, as markets believe the extra inflationary pressure resulting from the higher cost of imported fuel, food and consumer goods – and the need to reassure jittery investors – will require the Bank to increase the base rate more sharply.
Other companies that have withdrawn their products, according to Moneyfacts, are Vida Homeloans as well as the West Brom, Cambridge and Bath building societies.
About one in five households have a variable rate – either a tracker mortgage, where the rate paid is explicitly linked to the Bank base rate, or their lender’s standard variable rate (SVR) – and there is bad news for them, too.
SVRs change at the lender’s discretion and both Halifax and Scottish Widows Bank have announced that theirs is going up by 0.5% to 5.74%.
Leave a Reply
You must be logged in to post a comment.