Yahoo News UK sees record number of mortgage deals pulled from the market
A record number of mortgages have been withdrawn by lenders from the property market, new data has shown.
According to financial services provider Moneyfacts, some 935 products for new customers were pulled overnight in the UK, the biggest daily drop in more than a decade.
This included action from British lenders such as Virgin Money, Halifax and Skipton Building Society.
Coming amid deepening turmoil in financial markets, it is a particular cause for concern for people whose fixed terms may be ending soon.
Around 2 million people in the UK on a tracker or variable rate mortgage could see their monthly costs go up even further as a result of higher interest rates due to the pound's crash as the cost of living surges.
According to UK Finance around 1.8 million homeowners will come to the end of their fixed-rate deal in 2023.
Read more: How a sinking pound will inflate mortgage debt for millions
Mortgage debts are larger now than they were in 2008 during the global financial crash, as property prices jump and buyers are forced to borrow more to secure a home.
The volatility follows the announcement on Friday that the UK government will make huge tax cuts funded by borrowing. This led to a further plunge in the pound (GBPUSD=X), and a surge in government bond yields as concerns mounted over its ability to fund the plan.
“There is turmoil in the mortgage market, with the biggest daily drop in deals for more than a decade. This coupled with forecasts of significant interest rate hikes is causing concern for homeowners and buyers, especially those whose fixed terms may be ending soon,” Sam Richardson, deputy editor of Which? Money, said.
“If your deal ends in the next six months you may be able to lock in a new one now before rates rise further. But think about your medium and long-term plans when you’re looking for the right mortgage. Fixed-term deals usually come with early repayment fees, so you could be charged thousands of pounds if you move house and don't take your mortgage with you.”
Read more: Why has the pound fallen and what does this mean for you?
He added: “If you’re struggling to pay your mortgage bills, talk to your lender about what support it could offer. This could include a temporary payment holiday, lengthening the term of your mortgage to cut your monthly instalments or switching you temporarily to interest-only repayments.
“First-time buyers should carefully analyse what they can afford. Make sure you’re buying for the longer term so you can ride out any house price falls, don’t overstretch yourself and take advice from a mortgage broker.”
Financial experts at the Bank of England (BoE) now expect the key interest rate to reach 6% in 2023 — far above the 1.5% rate projected just months ago.
This has been priced into the interest rate "swaps market", which banks use to price the mortgages offered to consumers.
