Mortgages could go up by £190 a MONTH as banks start to withdraw deals

Mortgages could rise to huge amounts
Mortgages could rise to huge amounts

Mortgage lenders across the country have temporarily withdrawn deals, which could mean that the average family's mortgage rises by £190 per month.

This is the latest economic turmoil unleashed by Chancellor Kwasi Kwarteng's mini-budget.

Skipton Building Society immediately removed mortgage deals 

Skipton Building Society, which is headquartered in North Yorkshire, announced that it has pulled mortgage offers with immediate effect.

The building society notified mortgage brokers that all deals would be withdrawn for new customers, though applications that had already been submitted before the announcement would still be processed.

Read more: Councillors react to 'mini-budget' in Darlington and Durham

A spokesperson for Skipton Building Society told mortgage brokers: "We have temporarily withdrawn our mortgage range to new customers. This is so we can reprice following the market response over recent days.

"A new range will shortly be back on sale. We haven't taken this decision lightly but have done so in order to avoid further disruption for clients."

Other UK banks withdraw deals

A number of other large mortgage lenders have also withdrawn deals, as markets have started to predict huge rises in interest rates in 2022/23.

Virgin Money withdrew deals at 8 pm on Monday night, with other lenders following suit.

Halifax, the UK's largest lender, also withdrew all products that come with a fee.

Halifax is one of the major lenders withdrawing mortgage deals. Picture: Google Streetview.

Halifax said: "As a result of significant changes in mortgage market pricing we’ve seen over recent weeks, we’re making some changes to our product range."

"There is no change to product rates, and we continue to offer fee-free options for borrowers at all product terms and LTV levels, but we’ve temporarily removed products that come with a fee."

Nicolas Mendes, from mortgage broker John Charcol explained that lenders withdrawing deals resulted in a chain reaction in the market, where no lender wants to be the 'last one standing" with mortgages on offer, for fear of being swamped in applications. This has pushed borrowers into "uncharted territory".

The Bank of England has issued a statement

Andrew Bailey, the Governor of The Bank of England has issued a statement stating that they will "not hesitate to change interest rates by as much as is needed".

Read more: Mini-budget 2022: Live Blog of the Chancellor's announcements

An explanation of mortgage rates 

The mortgage base rate is currently 2.25 per cent, though The Bank of England is expected to hike this rate by a further two percentage points, and the rate may even top 6 per cent next year, according to market expectations.

The Resolution Foundation think tank calculated that for the average homeowner with a £140,000 mortgage, rates rising to 5 per cent could mean that monthly payments rise to £190.

If the base rate were to rise to 6 per cent, monthly payments would increase again by £80, or around £1,000 per year.

Other impacts of economic turmoil

Financial volatility has widely impacted the UK's economy, with the pound plummeting against the dollar - to a mere $1.03 on Monday, though it later stabilised at $1.08.

This means that many imported goods - such as oil and hobs, which are priced in dollars, will end up more expensive for British consumers.

Read next:

If you want to read more great stories, why not subscribe to The Northern Echo for as little as £1.25 a week. Click here.