Why Mortgage Lenders Are Withdrawing Rates and Deals

Seven months on from the turmoil of the Mini-Budget, the mortgage market is in flux again. Lenders are withdrawing products and interest rates are on the rise.

The number of residential mortgages available initially fell by 7%, dropping from 5,385 available deals to 5,012, according to data from Moneyfacts. The buy-to-let mortgage market was hit even harder, seeing a decrease of 14% since the beginning of the week beginning 29th May.

This was followed by a mass withdrawal of rates and deals in early June, with lenders including Santander, TSB and HSBC making significant changes to their ranges.

As a result, the average rate on two-year fixed-rate residential mortgages has crept up by 0.38%; but why is this the case, and what does it mean for you if you’re applying for a mortgage or remortgage amid this market volatility?

Why lenders are rethinking their product ranges

Mortgage lenders are reacting to the recent news that inflation is slowing at a less-than-expected rate, coming down to 8.7% in April, while previous forecasts pegged it at 8.2%.

Many experts were predicting that the Bank of England’s consecutive base rate increases – which now stand at 12 – might be nearing an end. The central bank upped the base rate to 4.5% this month, but the latest inflation figures have left the door open for further increases.

Furthermore, recent comments from Chancellor Jeremy Hunt, in which he described additional rates rises as the “only path to sustainable growth”, have added credence to predictions that the end of base rate rises is not yet in sight.

Many of the UK’s leading mortgage lenders had already priced their product range in based on an assumption that the base rate is unlikely to rise significantly from its current position, which is why only a minority of them adjusted their deals in the wake of May’s base rate shift.

Now that further rises look inevitable, lenders are rethinking their offerings across the board.

Which lenders have withdrawn rates and deals?

Some lenders responded to the latest market developments by withdrawing their entire fixed-rate mortgage range. These mortgage providers were Aldermore, Foundation Home Loans, and Tipton & Coseley Building Society. HSBC followed suit on 9th June by suspending its buy-to-let and residential lending.

However, several of these lenders, such as Aldermore, have since rebooted their ranges with higher rates. HSBC returned to the market on 12th June with a temporary product range.

In addition, the lenders below pulled select fixed-rate mortgage products from the market:

Over in the buy-to-let market Aldermore, Bank of Ireland UK, CHL Mortgages, Fleet Mortgages, Foundation Home Loans, and The Mortgage Lender withdrew their fixed product ranges to revise them when the inflation news dropped.

The following lenders have pulled selected buy-to-let products:

• Precise Mortgages
• Kensington
• Kent Reliance
• Hodge
• Marsden Building Society

Broker backlash

As many of the lenders who pulled mortgage products in the current climate withdrew them very abruptly, several mortgage advisors have taken to social media and the industry press to express their frustration at the lack of a notice period for product withdrawals.

Some have since banded together to campaign for mortgage lenders to offer at least 24 hours notice before deals disappear from the market, and this campaign has found support from broker-only mortgage lender MPowered Mortgages.

Which mortgage deals are still available?

Take a look at our rates table below to get an idea of the mortgage deals that are still available following the recent changes in the market.

Please note that the rates shown above are for example purposes, were accurate at the time of writing and are subject to change at any time at the lender’s discretion. 

What to do if you need a mortgage or remortgage right now

First of all, don’t panic. The market may be undergoing changes, but the new status quo is still taking shape and there’s a window of opportunity to secure a favourable rate before they rise.

Your first step should be to speak to a mortgage broker, as they can shave time off the application process and help you get a deal over the line quickly. What’s more, they can ensure the mortgage you’re getting is the best fit for your needs, with the lowest rate available.

One thing we must stress is that you should consult with a broker before delaying any mortgage or remortgage plans. Your initial consultation with them will always be free with no obligation to proceed, so it’s worth exploring your options before deciding which path to take.

During times of market turbulence and rates uncertainty, the value of professional advice is higher than ever. The right mortgage broker can help you find a range of solutions to whatever problem you’re facing, and that extends beyond mortgage applications.

They could also help you:

• Switch to a flexible deal with fewer restrictions on overpayments
• Release equity to consolidate debt
• Compared fixed rate and tracker deals for you
• Explore remortgage alternatives, such as secured loans