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Record number of UK mortgage transactions pulled as market turmoil unfolds


Overall, 935 mortgage products were withdrawn from the market on Tuesday, according to data from currency comparison website Moneyfacts.

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LONDON – Hundreds of UK residential mortgages have been pulled out after market turmoil stoked fears of prime interest rates rising as high as 6% next year.

Overall, 935 mortgage products were withdrawn from the market on Tuesday, according to data from currency comparison website Moneyfacts. The company said it was the largest 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 suspend the offering of their mortgage products, while NatWest revalues ​​their products, raising interest rates.

Santander said it is suspending some products for new customers and raising interest rates for both existing and new borrowers but will review their decision “according to market conditions.”

NatWest and HSBC did not immediately respond to CNBC’s request for comment.

At the beginning of the week, Virgin Money, Halifax and Skipton Building Society temporarily withdraw some of their mortgage transactions quote market movements.

Concern about mortgage rates becoming unsustainable has skyrocketed among borrowers and lenders. There have also been reports of reduced home sales backed by lenders from previously agreed-upon mortgages due to market uncertainty.

The UK’s bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarteng set out his “small budget” on Friday. Following his announcement, which included massive tax cuts and a shift to a “dripping economy”, the pound fell to an all-time low against the dollar on Monday morning.

Meanwhile, yields on the UK 10 years of gilding spiked to a 14-year high earlier in the week. These big market moves have raised inflation fears among investors and led them to believe that the Bank of England will make further rate hikes.

The central bank said on Wednesday that it will intervene in the bond market and postpone the sale of giltswhile temporarily buying bonds.

Markets are quickly starting to price in prime rates as high as 6% over the next year – which dramatically increases how expensive mortgages are for borrowers because prime rates are the norm. benchmark for UK mortgage and loan products.

‘Borrowers would be wise to stay calm’

A research note from Pantheon Macroeconomics suggests that for households looking to refinance a two-year fixed-rate mortgage, payments can add up to £627 ($670). every month.

There is also concern about borrowers having fewer options when trying to find a mortgage due to market turmoil, which could drive prices up even more.

Even so, Moneyfacts financial expert Rachel Springall says borrowers shouldn’t panic.

“Borrowers would be wise to stay calm in the face of the current volatility of the mortgage market and seek advice from an independent broker. Many lenders have been very vocal about the decision to foreclose. Their products are only a temporary measure, amid interest rate uncertainty.” Springall said.

Speaking to CNBC’s “Street Signs Europe” on Tuesday, Imogen Bachra, head of UK rate strategy at NatWest, echoed a similar sentiment, explaining that she believes mortgage products Pulling is a temporary issue related to short-term market volatility.



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