Tuesday 27 September 2022 08:14 AM Mortgage mayhem: TEN banks (and counting) pull house loans from sale in panic ... trends now

Tuesday 27 September 2022 08:14 AM Mortgage mayhem: TEN banks (and counting) pull house loans from sale in panic ... trends now
Tuesday 27 September 2022 08:14 AM Mortgage mayhem: TEN banks (and counting) pull house loans from sale in panic ... trends now

Tuesday 27 September 2022 08:14 AM Mortgage mayhem: TEN banks (and counting) pull house loans from sale in panic ... trends now

A growing number of banks are withdrawing mortgage deals over fears the Bank of England will further raise interest rates to counter the plunging pound - increasing monthly repayments for the average family by as much as £800. 

Lenders across the country, including Halifax, Virgin Money and Skipton, have taken the step after analysts warned the base rate could surge to 6 per cent next spring, after Sterling plummeted in response to Chancellor Kwasi Kwarteng's mini-Budget announcement last week. 

Others to have pulled or amended deals include Clydesdale Bank, Scottish Building Society, Leek United Building Society, Nottingham Building Society, Bank of Ireland and Paragon Bank. 

The surging costs could spell disaster for families who are already struggling with the cost-of-living crisis, while first time buyers face monthly repayments upwards of £1,100, a third more than they were paying in January, according to property portal RightMove. 

Which banks have pulled mortgages?  

Halifax: Pulled all its products for homebuyers that charge a fee 'as a result of significant changes in mortgage market pricing' in recent weeks. 

Virgin Money:  Removed its entire range for new customers. Applications for mortgages which have already been submitted will be processed as normal and existing borrowers will still be able to transfer to a different deal.

Skipton Building Society: Pulled mortgage ranges for new customers. 

Clydesdale Bank: Pulled fixed mortgages for new customers. 

Paragon: Pulled fixed mortgages for new customers.

Leek United: Pulled fixed mortgages for new customers.

The Nottingham for Intermediaries: Pulled fixed mortgages for new customers.

Scottish Building Society: Withdrew all fixed rate mortgages.

Darlington: Withdrew all fixed rate mortgages.

CHL Mortgages: Withdrew all fixed rate mortgages.

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The base rate is currently at 2.25 per cent after the seventh consecutive increase last Thursday – up from a record-low of 0.1 per cent in December.

An increase to as high as 6 per cent next year would be a major blow for around two million homeowners who have variable loans, which move in line with the base rate. 

There are also a further 1.8million borrowers who are currently locked into cheap fixed deals which are due expire over the next year.

They now face paying thousands of pounds more a year when they come to remortgage as lenders frantically hike rates to reflect analysts' predictions. 

Someone who took out a £200,000 two-year fixed mortgage in March 2021, when the average rate was 1.5 per cent, would see their annual bill leap by £7,000 if rates rise to 6 per cent, according to figures from investment firm AJ Bell.

In another setback for borrowers desperately seeking to lock into an affordable fixed deal, many lenders have responded to interest rate uncertainty by temporarily quitting the market altogether. 

As many as 20 lenders moved to withdraw dozens of loans yesterday, according to mortgage broker L&C.

The pound steadied in early trading in Asian markets on Tuesday as it recovered ground slightly. 

Sterling sat around around 1.08 dollars by 7am, but economists have warned it could still fall to parity with the dollar this year for the first time.

Senior Tory MP Huw Merriman - who backed former chancellor Rishi Sunak for Conservative leader - warned Liz Truss may be losing voters 'with policies we warned against', as a new YouGov survey put Labour 17 points ahead, the party's greatest lead since the firm started polling in 2001.

Halifax

Virgin Money said its withdrawal of mortgage products for new customers would take place at 8pm

Turmoil in British financial markets forced mortgage lenders to temporarily withdraw and reprice products for new customers

Everything you need to know about the Sterling crisis 

What has happened?

The pound, which was already at a 37-year low against the dollar, has fallen further. Sterling was trading at more than $1.16 when Liz Truss became Prime Minister just 20 days ago. It fell close to $1.08 on Friday and went as low as $1.0386 during overnight trading in Asia. UK bonds have also slumped – pushing up the cost of government borrowing.

Why is sterling down?

The dollar has been surging against all currencies as it combats inflation with aggressive rate hikes. The US economy also looks healthier than those of Britain and Europe. Meanwhile Britain has been racked by political uncertainty and a cost of living crisis. The Bank of England has not acted as forcefully to combat inflation as expected and new Chancellor Kwasi Kwarteng has stunned markets with the biggest tax cuts in 50 years. Coupled with the massive energy bill support package, this has fuelled worries about the scale of government borrowing. Mr Kwarteng doubled down over the weekend, pledging: 'There's more to come'. The pound then resumed its sell-off.

What can be done?

The Chancellor has ruled out a U-turn, leaving the Bank of England to watch the markets.Governor Andrew Bailey says the Bank 'will not hesitate' to hike rates if needed, but that may not be enough to halt the pound's rapid slide.

Can a weak pound have advantages?

UK exporters will find their products are more competitively-priced against global rivals. However, components for products made in the UK are often made abroad so those exporters will in many cases be absorbing higher costs.

What does it mean for

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