This could be the last chance to close in for clients
With a number of UK lenders – big and small – withdrawing their mortgage products amid speculations of an emergency base rate increase, an industry expert said very few mortgage deals with rates under 5% will be left in the market by next week, putting more pressure on homebuyers to get a mortgage deal sooner rather than later.
“This is the first time we’ve seen a major withdrawal of products and repricing in the mainstream market since the global financial crisis,” Ray Boulger (pictured), senior mortgage technical manager at broker John Charcol, stated in a report published by the Financial Times. “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%. Any lender who hasn’t pulled out yet is almost certainly going to on Tuesday.”
Halifax, the UK’s biggest mortgage lender, said it will remove all its products for homebuyers that charge a fee by close of business today. Virgin Money and Skipton Building Society had earlier withdrawn their mortgage products for new customers temporarily.
Other lenders reported to have pulled mortgage products from the market include the Nottingham Building Society, Bank of Ireland, Leeds Building Society, Paragon Bank, Scottish Building Society, Darlington, CHL Mortgages, and Family Building Society.
The surge of lenders withdrawing their products was triggered by a potential hike in interest rates once again after the Bank of England was asked to intervene as the pound plummeted to an all-time low on Monday.
Read more: Multiple lenders stop offering mortgage products as Kwasi-meltdown continues.
The uncertainty around the risk of an emergency rate rise is likely to see other lenders withdrawing products or increasing rates dramatically, according to Jamie Lennox, director at broker Dimora Mortgages.
Vadim Toader, chief executive at neolender Proportunity, pointed out that the weakening of the pound and increasing interest rates had put lenders in a tough position.
“It is not viable for lenders to offer the mortgage rate deals we were seeing only last week,” Toader stressed. “This means, to access a decent rate, home buyers will need significantly higher deposits.
“However, it is unlikely that those saving to buy a house will see the recent interest rate increases passed on to their savings rates, making raising that larger deposit on their own, a longer and more arduous task. Quite the opposite, it will also most likely mean a further increase in rent prices given landlords mortgages will also go up, which means saving will be that much harder.”
Toader said more needs to be done to help first-time buyers access the finance they need to start their homeownership journey.
“There is a lack of awareness about products such as mortgage booster loans, which offer a solid alternative for many buyers to help them unlock the funds needed for their ideal home,” he added. “Brokers, fintechs, and lenders must work together to raise awareness of alternative financing options, so would-be homeowners are empowered to still realise their dream of homeownership, despite economic factors beyond their control.”
