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