Banks in the UK have withdrawn a record number of mortgage products overnight following a sharp jump in gilt yields in the wake of the chancellor’s mini-budget.
Some 935 home loan products were pulled from the market by early Wednesday, more than double the previous record set during the Covid-19 pandemic, according to independent data provider Moneyfacts.
The move comes after major lenders including Halifax, Virgin Money and Santander stopped offering new mortgages as a result of volatile gilt markets, which make it difficult to price new home loans.
Other large lenders, including Nationwide and HSBC, were forced to reprice their deals at higher rates or stop offering loans early in the day, due to a deluge of demand from new customers who had fewer choices.
The total number of mortgage products available has dropped from 3,961 on Friday to 2,661 on Wednesday. Moneyfacts says its data go back to 2011, after the financial crisis, when banks also removed deals from the market.
The spike in gilt yields followed new chancellor Kwasi Kwarteng’s mini-budget on Friday, after which the value of sterling plummeted to its lowest level in nearly four decades and gilt prices fell.
Lenders’ decisions to pull deals are driven by the cost of accepting applicants for mortgages that are no longer profitable following movements in swap rates, and the danger of offering more competitive mortgages at a time when thousands of borrowers are scrambling to secure the lowest rates.
Brokers said they were receiving more calls than usual from new and existing customers who are concerned about their rates.
Ray Boulger, a broker at John Charcol, said: “People have been phoning asking if they should ditch their five-year fixed deal, pay the early repayment charge and move on to a new deal now. But that’s the wrong thing to do [because they are already on attractive rates].”
Boulger added that it was “highly unusual” for lenders to withdraw from offering new mortgages for nearly a week, a practice not seen since the financial crisis.
Chris Sykes, product director at mortgage broker Private Finance, said he had received about 70 emails from clients on Tuesday morning worried that their mortgage applications would be pulled.
He and several colleagues had been working from 6am to 10pm this week, he said, to address their questions and confer with lenders. “If your application is in, for the vast majority of people, your rate is secure. It’s very unusual for lenders to pull rates at that point,” he said.
But while repricing or “pulling” rates was possible, it was highly unusual for lenders to offer no rates at all in a particular category of lending for an extended period of time.
“Lenders don’t know how to price at the moment because they don’t know how much they’re going to be paying for the money that they’re lending — so it makes sense that they’re pulling rates.”
Alarm among borrowers is also causing problems among conveyancing solicitors deluged by queries over the uncertain mortgage climate.
Beth Rudolf, director of delivery at the Conveyancing Association, a trade body for the industry, said one law firm had seen an extra 300 calls to its team in one day, on top of the usual 1,000, from customers worried about the security of their mortgage offer. “We haven’t counted how many email queries we got on the same thing.”
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