Overall, 935 mortgage products withdrew from the market on Tuesday, according to data from financial comparison site Moneyfacts.
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LONDON – Hundreds of mortgage deals have been withdrawn in the UK after market turmoil raised fears that base rates could rise to as high as 6% next year.
Overall, 935 mortgage products withdrew from the market on Tuesday, according to data from financial comparison site Moneyfacts. It was 462 when the first Covid lockdown was announced in
HSBC and Santander are the latest major UK lenders to suspend their mortgage product offerings, while NatWest is repricing its products and raising interest rates.
Santander has suspended some products for new customers and raised interest rates for existing and new borrowers, but said it would consider the decision “in the light of market conditions”.
NatWest and HSBC did not immediately respond to CNBC’s request for comment.
Earlier in the week Virgin Money, Halifax and Skipton Building Society Temporarily withdraw some mortgage transactions Citing market trends.
Concerns over unaffordable mortgage rates are soaring among borrowers and lenders. There are also reports of home sales failing as lenders withdrew previously agreed mortgage deals due to market uncertainty.
Britain’s bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarten set a ‘mini-budget’ on Friday. The British pound hit a record low against the dollar on Monday morning following his announcement, which included major tax cuts and a move to a ‘trickle-down economy’.
On the other hand, UK yields are 10 year old foil It hit a 14-year high earlier in the week. These major market moves have raised inflation concerns among investors and led them to believe that the Bank of England will implement further interest rate hikes.
The central bank on Wednesday intervene in the bond market and postpone the sale of gold coinswhile temporarily buying government bonds.
The market immediately started setting the base rate at 6% next year. As the base rate is the benchmark for UK mortgages and loan products, it dramatically boosts how expensive a mortgage is for borrowers.
For households looking to refinance a two-year fixed-rate mortgage, payments could jump as much as £627 ($670) a month, according to a Pantheon Macroeconomics research note.
Concerns have also been raised that the market turmoil could leave borrowers with fewer options when trying to find a mortgage deal, further pushing up prices.
Nevertheless, Moneyfacts financial expert Rachel Springall says borrowers shouldn’t panic.
“Borrowers are wise to keep calm with the current volatility in the mortgage market and seek advice from independent brokers. I strongly argue that it is a sensible measure,” said Springall.
Speaking to CNBC’s Street Signs Europe on Tuesday, NatWest’s head of UK rates strategy, Imogen Bachra, echoed similar sentiments, saying the mortgage product being withdrawn is linked to near-term market volatility. I believe that this is a temporary problem.