HSBC and Santander, two of the UK’s largest mortgage providers, suspended new deals on Tuesday, while Nationwide increased rates, as homebuyers chased a dwindling supply of home loans.
Together with Lloyds Banking Group, which suspended some products on Monday, the lenders account for about half of the UK mortgage market. A host of smaller providers have also stopped offering products in response to chancellor Kwasi Kwarteng’s mini-Budget speech on Friday.
The pause in new lending comes after yields on UK bonds rose sharply following sterling’s fall against the dollar to its lowest rate in decades.
Banks still offering new mortgages on Tuesday morning — including HSBC, Barclays and NatWest — were being deluged with demand, according to brokers.
Aaron Strutt, a broker at Trinity Financial, said: “One of our brokers is in an online queue to submit an application to HSBC and there are 683 others in front of him trying to do the same thing.
“For the moment . . . there are options for borrowers, but we need the other lenders to come back into the market otherwise they will receive too many applications and pull out.”
HSBC told brokers later on Tuesday that it had “removed from sale” its new residential and buy-to-let products “with immediate effect”. The bank said it would return to market tomorrow.
Strutt added: “There’s going to be a race to secure these mortgages tomorrow.”
Lenders have indicated it may take a week to reprice deals, an unprecedented length of time that leaves prospective buyers temporarily stranded.
Almost 300 mortgage products were pulled from the market overnight on Monday, according to data site Moneyfacts, including by Halifax, part of Lloyds, the UK’s largest mortgage provider. Lloyds has since confirmed the changes applied across its other brands, Lloyds Bank and Bank of Scotland.
Santander said it would be removing its 60 per cent and 85 per cent loan-to-value products for new customers and increasing other rates for current and new customers, starting at 10pm on Tuesday.
“Customers who have already applied by this time will not be impacted,” it said in a statement.
Nationwide said it was increasing two, three, five and 10-year fixed rates by between 0.90 per cent and 1.2 per cent from Wednesday.
It said existing customers looking to switch to a new deal would have lower increases, of between 0.55 per cent and 0.85 per cent.
Henry Jordan, Nationwide’s director of mortgages, said: “The changes made to our new business range are reflective of the current interest rate environment, which has seen mortgage rates increase across the market in line with a rapidly changing economic environment.”
Banks use swap rates to mitigate interest rate risk on fixed deals, by swapping payments on the mortgage loan to a counterparty in exchange for floating-rate payments.
Andy Golding, chief executive of OneSavings Bank, said: “It’s difficult to price fixed-rate mortgages now because the swap curve is so volatile.”
He said the lender was repricing a number of its mortgages on Tuesday.
Atom Bank, an app-based lender, said it had also pulled its new home loans.
Mark Mullen, Atom’s chief executive, said he hoped to be lending again soon. “The markets are very turbulent and being able to price them appropriately is very difficult, so we’re better off not guessing and waiting until things settle down a bit,” he added.
Other lenders to withdraw some or all of their mortgage deals on Tuesday included Hodge, buy-to-let specialist CHL, Precise Mortgages and Livermore, which focuses on the over-50s market.
Accord Mortgages, part of the Yorkshire Building Society Group, told brokers it would withdraw all of its residential and buy-to-let deals on Tuesday night, “whilst we review our product ranges”. It insisted existing applications would be honoured and there would be no changes for existing borrowers seeking a product transfer.
Additional reporting by Siddharth Venkataramakrishnan
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