Lenders pull mortgages from sale amid market volatility after pound plunges
The Bank of England said it could hike the interest base rate in an attempt to rein in inflation
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Your support makes all the difference.Three lenders have temporarily pulled mortgages that come with fees for new customers in response to market volatility prompted by the fall of the pound.
Halifax, Britain’s largest mortgage lender, is to withdraw the products until it works out what interest rates to charge, according to Reuters news agency.
Virgin Money and Skipton have reportedly followed Halifax’s move.
The moves come after the Bank of England announced that it would hike interest rates by “as much as needed” in a bid to control inflation.
It’s feared that the Bank might have to increase rates again in a bid to steady the pound, following a series of increases over recent months.
The Bank said it would make a “full assessment” of interest rates at the next monetary policy committee meeting, scheduled for 3 November.
On Monday morning, the pound fell to its lowest-ever level against the US dollar, dropping by more than 4 per cent to just $1.03 before regaining some ground.
The markets panicked over new chancellor Kwasi Kwarteng’s mini-Budget on Friday, in which he announced controversial tax cuts worth £45bn – including axing the 45p tax rate for top earners, the reversal of his predecessor Rishi Sunak’s hikes to national insurance and cutting stamp duty – to break what he called the “vicious cycle of stagnation”.
Because his tax cuts are unfunded, they would need to be financed through the selling of gilts. Changes to the gilt market affect swap rates, which lenders use to make decisions on how much to charge borrowers.
A spokesperson for Halifax, part of the Lloyds Banking Group, said: “As a result of significant changes in the cost of funding, we’re making some changes to our product range.
“There is no change to product rates and we continue to offer fee-free options for borrowers at all product terms and LTV [loan-to-value] levels, but we’ve temporarily removed products that come with a fee.”
Virgin Money said: “Given market conditions, we have temporarily withdrawn Virgin Money mortgage products for new-business customers.
“Existing applications already submitted will be processed as normal and we’ll continue to offer our product transfer range for existing customers.
“We expect to launch a new product range later this week.”
About 1.8 million households are expected to look for new mortgage deals when their contracts end next year, according to data from UK Finance.
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