Mortgage deals are being pulled by banks and building societies after the fall in the pound fuelled expectations of an emergency interest rate rise. So whether you are a first-time buyer or looking to remortgage what does the mortgage market turmoil mean for you?
Hundreds of mortgage deals have been withdrawn by banks and building societies as they digest the fallout from last week’s mini-budget which has altered the outlook for interest rates.
The country’s largest mortgage lender Halifax, for example, has withdrawn its fee-paying mortgage products where borrowers paid an upfront fee to secure a lower fixed interest rate.
Halifax is not alone. On Tuesday morning 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 data firm Moneyfacts. At the end of last year there were 5,315 products.
“The future is certainly looking bleak when the biggest lender in the UK pulls a big selection of their products on offer,” says Jamie Lennox, a director at Dimora Mortgages. “The uncertainty around the risk of an emergency rate rise is likely to see other lenders withdrawing products or increasing rates dramatically until they know the extent of how this all pans out.”
In short the outlook for interest rates has changed and lenders need ensure their mortgage products are profitable, as well as affordable for customers. Experts said a rise in the cost of long-term borrowing due to the recent upheaval meant the cost of offering new deals had risen.
Lenders price their mortgage interest rates against the Bank of England base rate which increased to 2.25% last week. Until recently financial markets thought been the base rate would get to 4.5% by next
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