Brokers see a worrying sign of what's to come
Coventry Building Society has announced that it is increasing the rates of selected residential and buy-to-let products.
In line with its commitment to give intermediary partners two days’ notice of product closures, the lender informed brokers that it will be closing certain products at 8pm tomorrow, July 18.
Coventry said it would be launching new products at 8am on Wednesday, July 19.
To be affected by the rate changes are all residential fixed new business rates, including offset, interest-only, and offset interest-only, which will all be increased.
The mutual is pulling out all fixed new business rates at 80% loan-to-value (LTV), and is temporarily withdrawing the remortgage cashback option on offset, interest-only, and offset interest-only.
Meanwhile, all fixed buy-to-let and portfolio BTL new business rates at 65% LTV will be increased. It will withdraw all fixed BTL and portfolio BTL new business rates at 75% LTV.
There will be no changes on the lender’s existing customer only (product transfer and further advance) rates in both residential and buy-to-let ranges.
Find out Coventry Building Society's mortgage rates for existing customers in this article.
Brokers fear more lenders will follow suit
“A worrying sign of what’s to come is the notice of product withdrawals from some lenders, indicating that they’re bracing for impact on Wednesday when inflation data is announced,” commented Paul Welch, founder and chief executive at Large Mortgage Loans. “If core inflation figures continue their upward trend, money markets will react, driving up swap rates.
“What does this mean for homeowners? Another surge in fixed-rate mortgages, potentially spiking into the 7.5% realm. Money markets perceive the UK economy as volatile, and until we tame inflation, mortgage borrowers will continue to bear the brunt of this financial storm.”
Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial, echoed Welch’s sentiment, saying that with the timing of Coventry’s withdrawal of certain residential and BTL products, “it’s like they know something’s coming.”
“Withdrawing higher loan-to-value products indicates the uncertainty Coventry is feeling in the current climate,” he pointed out. “This might be followed by other lenders, especially if the next inflation print doesn’t drop substantially.”
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