Overall, 935 mortgage products were withdrawn from the market on Tuesday, according to data from money comparison site Moneyfacts.
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LONDON – Hundreds of UK residential mortgage deal offers have been withdrawn after market chaos sparked concerns about raising base rates to as much as 6% next year.
Overall, 935 mortgage products were withdrawn from the market on Tuesday, according to data from money comparison site Moneyfacts. The company said this was the biggest daily drop ever recorded, with the previous high of 462 when the first UK Covid lockdown was announced in 2020.
HSBC and Santander are the latest major UK lenders to pause offerings of mortgage products, while NatWest has repriced its products and raised rates.
Santander said it has halted some products for new customers and raised rates for new and existing borrowers, but would review its decisions “in 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 withdrew some of its mortgage offers citing market developments.
Concerns about mortgage rates becoming unaffordable have run high among borrowers and lenders. There have also been reports of falling home sales as lenders backed out of previously agreed mortgage deals due to market uncertainty.
UK currency and bond markets have been in turmoil since Finance Minister Kwasi Kwarteng presented his “mini-budget” on Friday. Following his announcement, which includes significant tax cuts and a shift to “trickle down economics”, sterling fell to an all-time low against the dollar on Monday morning.
Meanwhile, the performance of the UK 10 year old gold spiked to 14-year highs earlier in the week. These major market moves sparked inflation fears among investors and led them to believe that the Bank of England would implement further interest rate hikes.
The central bank said on Wednesday that would intervene in the bond market and postpone the sale of giltswhile temporarily buying bonds.
Markets quickly began pricing in a base rate of up to 6% for next year, dramatically increasing the cost of mortgages for borrowers, as the base rate is the benchmark for mortgage and loan products from the United Kingdom.
A Pantheon Macroeconomics research note suggested that for households looking to refinance a two-year fixed-rate mortgage, payments could rise as high as £627 ($670) per month.
Concerns have also been raised that borrowers will have fewer options when trying to find a mortgage deal due to market chaos, which could push prices higher still.
Despite this, Moneyfacts finance expert Rachel Springall said borrowers should not panic.
“Borrowers should remain calm about the current volatility in the mortgage market and seek the advice of an independent broker. Several lenders have made it clear that their decision to withdraw products is a temporary measure, amid interest rate uncertainty.” “. Springall said.
Speaking to CNBC’s “Street Signs Europe” on Tuesday, Imogen Bachra, head of UK rates strategy at NatWest, echoed a similar sentiment, explaining that she believed the mortgage product recall is a temporary issue related to short-term market volatility.