In the past week, mortgage lenders have pulled almost 700 mortgage products from the market in response to worse than expected economic conditions.
Last week, FTAdviser reported that Fleet Mortgages, Lendco, and Platform, all pulled products from the market in response to April’s inflation figure, which although trending downwards was above the Bank of England’s prediction.
Nationwide Building Society also increased selected fixed rate products and its tracker rates by 0.45 percentage points.
Today (May 30), mortgage brokers have returned to their desks after the bank holiday weekend to further diminished choice for borrowers.
In the last week alone, 283 residential mortgage products have been pulled by lenders alongside 400 buy-to-let products, according to Moneyfacts.
One broker said simply that the situation is “mental”.
At the same time, lenders have been repricing their products upwards.
According to Moneyfacts, the average two-year fixed rate mortgage product across all loan-to-values sits at 5.38 per cent today, up from 5.33 per cent this day last week.
Likewise, the average five-year fixed rate product across all loan-to-values has also increased from 5.01 per cent this day last week, to 5.05 per cent today.
In an email sent to brokers this morning, Accord Mortgages announced that it was withdrawing its rates today and that many of its new business products would be increasing by as much as 0.77 percentage points this week.
Who is gone?
Over the last few days Aldermore, Foundation Home Loans and Tipton & Coseley Building Society have pulled their entire fixed rate ranges.
Meanwhile, Bank of Ireland UK, Bath Building Society, Furness Building Society, Newcastle Building Society, Halifax, Hinckley & Rugby Building Society and Kensington all pulled selected fixed rate products over the past few days.
As did LendInvest, Marsden Building Society, MPowered Mortgages, Principality Building Society, Scottish Building Society and Vernon Building Society.
Commenting on the turbulence, mortgage broker Lewis Shaw, owner of Riverside Mortgages said: “It’s like standing in front of a mountain knowing there’s going to be an avalanche but unable to do anything about it.”
Shaw said the situation is akin to what happened to the mortgage market off the back of last year’s “mini” Budget, but this time “we can’t sack Truss and Kwarteng to fix it and lenders have squeezed their margins to keep things as sensible as they can.”
In his view, the knock on impact these higher rates are going to have on homeowners will be potentially catastrophic.
“The amount of disposable income that’s about to be wiped from household budgets is scary and eventually that shows up in unemployment as businesses go under from lack of custom,” Shaw said.
He added: “Hopefully I’m wrong and it gets fixed quickly but I don’t see how.”
