Lenders temporarily pull mortgage deals in anticipation of interest rate rises


The UK’s largest mortgage lender, Halifax, which is part of Lloyds Banking Group, has temporarily pulled all mortgages which come with a fee, stating: “As a result of significant changes in the cost of funding, we’re making some changes to our product range.”

As the Telegraph noted, mortgage deals with a fee are typically priced with lower interest rates than mortgages without a fee.

Last week, Advantage wrote about the likely impact of Liz Truss’s ‘mini budget’ (including an extension of the stamp duty cut) on the housing market, saying that: “although the (stamp duty) tax cut will be welcomed by prospective buyers, they may well be getting their calculators out this evening and offsetting the upfront savings against the cost of higher mortgage payments.”

And it seems that we’ll be seeing those higher mortgage costs sooner rather than later with Reuters journalist Andy Bruce stating that Virgin Money has temporarily withdrawn all mortgage products for new customers, according to an email sent to brokers. He added that they’re hoping to relaunch these products later this week. At the time of writing, Skipton Building Society had also temporarily withdrawn their mortgage ranges for new customers.

Lenders withdraw mortgage deals in order to adjust their rates

The Financial Times noted: “The move from the banks (to withdraw various mortgage deals) comes after UK bond prices, which move inversely to yields, have plummeted and sterling on Monday hit its lowest level against the dollar in almost 40 years.”

They quoted Ray Boulger, an analyst at John Charcol, who said: “The huge rise in gilt yields means lenders have to reprice mortgages very significantly. I expect by next week, there will be very few mortgage deals available with rates under 5 per cent.”

iNews quoted Andrew Montlake, spokesperson for Coreco mortgage brokers, who said: “Lenders have decided the market is so volatile they can’t price anything properly so they are stopping lending and will wait and see what the market does. What we are seeing is lenders who want to protect themselves from offering deals today that become loss lenders tomorrow. No one wants to be stuck offering the cheapest rate on the market.”

iNews concluded: “Many homeowners are also now rushing to lock in fixed deal before early November, when the Bank of England will hike rates again.”


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