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UK lenders halt mortgage deals to customers after market chaos

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Britain’s bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarten announced a ‘mini-budget’ on Friday.

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LONDON – UK lenders Virgin Money, Halifax and Skipton Building Society have canceled some of their mortgage deals for clients following the turmoil in the UK bond market.

Virgin Money and Skipton Building Society have temporarily suspended offering mortgages to new customers, while Halifax, owned by Lloyds Banking Group, will suspend fee-based mortgage products that typically offer lower interest rates. .

A Virgin Money spokeswoman said this was due to “market conditions,” but Halifax attributed the move to “a significant change in pricing in the mortgage market.”

The Skipton Building Society said it has paused the product to “re-pricing following the market reaction of the last few days.”

Britain’s bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarten announced on Friday a ‘mini-budget’ that included significant tax cuts and a push towards a ‘trickle-down economy’. Yields on his 10-year gold coin in the UK surged to levels he hadn’t seen since 2008 on Monday. british pound plummeted to All-time low against the dollar.

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Inflation fears have been fueled by market movements, indicating that the Bank of England needs to keep raising interest rates to combat rising prices.the central bank said We will not hesitate to do this as we aim to bring inflation back to 2%. I was watching the trend.

Markets are starting to price in a base rate hike from 2.25% now to 6% next year, raising concerns among mortgage lenders and borrowers. This base rate is the benchmark for all types of mortgages and loans in the country.

“The average quoted interest rate for two-year fixed-rate mortgages could rise to around 6% early next year if the MPC applies. [Monetary Policy Committee] Bank rates have risen as fast as the market expected and are 400bp higher than they were two years ago,” said Samuel Toombs, UK chief economist at Pantheon Macroeconomics, and his colleague, a senior UK economist. One Gabriella Dickens said in a research note.

“Households refinancing their two-year fixed rate mortgages in the first half of next year will see their monthly payments jump from £863 when they took out their mortgages two years ago to about £1,490 early next year.”

Due to changing market conditions, some lenders have changed the products they offer.

“Major mortgage players are setting sail after a turn of winds. Market expectations for future interest rates have risen dramatically overnight, raising the cost of doing business and pushing lenders to re-invest. We are taking a break for valuation and repricing,” said Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown, in a research note.

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Not only does this development mean that mortgage prices will rise, but it will likely mean less choice for borrowers. A series of smaller lenders have reportedly already stopped selling mortgage products over the past few months due to the pressure of rising interest rates, narrowing the market.

Rob Gill, managing director of Altura Mortgage Finance, said the problem would only be exacerbated by the suspension of products by major lenders.

“Borrowers are already experiencing significant increases in mortgage costs, so the reduction in choice as large lenders exit the market will only exacerbate the situation,” he said.

“We have seen smaller lenders exit the market fairly regularly in recent months as they have struggled to cope with rising interest rates. The shift to lenders is significant and a major concern for mortgage borrowers.”

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