United Kingdom Banks cut mortgage offers amid the economic panic.
Home buyers will hit a bottleneck taking out new loans as lenders pull mortgages at the fastest rate since the pandemic-induced housing market shut down.
Banks have responded to intensifying fears of significant house price falls by reducing options for homeowners.
The number of deals fell by 17pc between May and the end of July, according to Twenty7tec, a mortgage website.
When house moves were effectively banned, this was the largest drop since spring 2020.
Lenders removed, even more offers after the Bank of England announced the largest rise in the Bank Rate for 27 years on Thursday, taking the rate to a 14-year high of 1.75 pc. United Kingdom Banks cut mortgage
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United Kingdom Banks cut mortgage offers amid the economic panic
The number of deals is expected to shrink further in the coming weeks, Twenty7tec warned. James Tucker of the firm said lenders were cutting deals with smaller margins and focusing on less risky homebuyers because of the darkening economic outlook.
If house prices fall, this could include offering fewer lower deposit deals as lending to such buyers is less appealing.
He added: “Some products make less economic sense when rates are higher; some buyers will have seen their risk profile change due to inflation, the changing jobs market, mortgage defaults and other macroeconomic conditions.”
According to Moneyfacts, an analyst, twelve major high street lenders have withdrawn deals since the Bank Rate rise was announced. Barclays cancelled four of its five-year fixed-rate home loans.
Leeds Building Society cut its two-year fix at 3.25 pc. The Co-operative Bank and Platform have withdrawn three- and five-year fixed rate deals, while West Brom Building Society has cut two-year, three-year and five-year fixed rate deals.
The number of available mortgage deals is now at its lowest level since October 2021– when the market was still recovering from the Covid plunge– and a quarter less than the level recorded before the pandemic began.
Buyers must choose from a quickly shrinking pool. “The 15,000 or so products that are left have to do the work of the whole market,” Mr. Tucker added. The deals that are left are getting much more expensive. United Kingdom Banks cut mortgage
On Thursday, Santander was the first lender to announce that its variable rate deals would increase to match the 0.5 percentage point increase in the Bank Rate from September 3.
Barclays also announced a half-point addition to its variable tracker rates. HSBC raised rates on selected fixed-rate deals by a quarter point. First Direct increased its variable tracker rates by a half point.
The Bank on Thursday announced that it expected inflation to hit a 40-year high of 13.3 pc. In turn, this will trigger a year-long recession and a 3.7 pc drop in real household incomes across 2022 and 2023– the largest hit since records began.
United Kingdom Banks cut mortgage
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List of 10 Top Banks in the United Kingdom (UK)
1. HSBC Holdings
2. Lloyds Banking Group
3. Royal Bank of Scotland Group
4. Barclays
5. Standard Chartered
6. Santander UK
7. Nationwide Building Society
8. Schroders
9. Close Brothers Group plc:
10. Coventry Building Society
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