Lenders pull mortgage deals

Banks including Santander, HSBC and Yorkshire Building Society have suspended mortgage deals after a fall in the pound prompted forecasts of rising interest rates, with the lenders joining Virgin Money and Skipton Building Society in halting mortgage offers for new customers.

Meanwhile, Nationwide said it will lift rates on a range of fixed mortgages, Lloyds has paused some of its products and Halifax has removed mortgage products that come with a fee “s a result of significant changes in mortgage market pricing.

Others to have pulled or amended deals include Clydesdale Bank, Scottish Building Society, Leek United Building Society, Nottingham Building Society, Bank of Ireland and Paragon Bank.

Data from Moneyfacts has indicated that the number of residential mortgages on offer by lenders fell to 3,596 yesterday, This marks a drop from 3,961 on Friday,  the day of the Chancellor’s mini-Budget.

Economists have predicted that interest rates to more than double to 5.8% by April, from the current level of 2.25%.

Commenting on the change Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown “Major mortgage players are hauling in the sails after the wind changed. The dramatic overnight hike in market expectations of future rates has ramped up the cost of doing business, and lenders are taking a break to reassess and reprice.”

“Fixed rate mortgages don’t just depend on the rate today, they also depend on rate expectations. The key for the mortgage market is gilt yields. When rates rise, gilt yields also rise, and these feed through into the swap rates that drive the fixed rate market. The dramatic fall in the pound on Monday led to fears of inflation – because the price of anything that’s imported will rise. As a result, it led to expectations that the Bank of England would hike rates to try to bring it back down again. For a while yesterday, there were expectations of a swift emergency rate rise. Traders then started pricing in a series of rate rises to 6% – bolstered by a statement from the Bank that it would be bold in its efforts to bring inflation back down to the 2% target.”