Mortgage lenders pull nearly 400 products as swap rates jump

A jump in swap rates caused by higher-than-expected inflation figures last week has led to hundreds of mortgage deals being pulled as lenders fret over higher interest rate hikes.

Lenders use swap rates to price fixed-rate mortgages and last week’s inflation data caused a mini tsunami in financial markets not seen since Liz Truss’s disastrous mini-Budget leaving banks struggling to work out how to price deals.

Since the start of last week, the number of mortgages has fallen from 5,385 deals to 5,012 while the average rate on a 2 and 5-year fixed mortgage has risen to 5.38% and 5.05% since the start of May 2023.

The buy-to-let market has also seen lenders pull fixed deals, and average rates are also on the rise.

PULLED PRODUCTS

Moneyfacts reveals Bank of Ireland UK; Bath Building Society; Furness Building Society; Newcastle Building Society; Halifax; Hinckley & Rugby Building Society;  Kensington; LendInvest; Marsden Building Society; MPowered Mortgages; Principality Building Society; Scottish Building Society and Vernon Building Society have all pulled selected fixed mortgage products over the past few days.

Meanwhile Aldermore, Foundation Home Loans and Tipton & Coseley Building Society have pulled their entire fixed rate range.

In buy-to-let Precise Mortgages; Kensington; Kent Reliance and Marsden Building Society have all pulled selected fixed mortgage products. And Aldermore; Bank of Ireland UK; CHL Mortgages; Fleet Mortgages; Foundation Home Loans and The Mortgage Lender have pulled their entire fixed rate range.

This volatility is down to the concerns surrounding future interest rate hikes.”

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, says: “Over the past few days, we have seen a few lenders withdraw selected fixed products, with some pulling out of the market, at least temporarily.

“Product choice has started to fall, and as may be expected, average fixed mortgage rates are on the rise.

“This volatility is down to the concerns surrounding future interest rate hikes, and lenders are reassessing their propositions.”

And she adds: “Landlords will be disappointed to see a drop in product choice and that average fixed rates are on the rise.

“The volatility surrounding interest rates towards the tail end of 2022 started to improve, but as it stands, average rates are expected to keep climbing because of the ongoing concerns over future interest rate hikes.

“Buy-to-let product choice dropped below 1,000 deals in October last year, in the aftermath of the fiscal announcement, so it will be a concerning echo of that period if choice plummets to such a low again.”

Not good news for a government swimming in debt.”

Coventry Building Society said yesterday that it would be closing selected products from 8pm this evening including all 2, 3 and 5-year fixed new business £999 fee deals (excluding iffset, interest-only and offset interest-only.

Graham Cox, founder of Self Employed Mortgage Hub, says: “All the major lenders are being forced to reprice their products due to the fallout of last week’s worse-than-expected inflation figures.

“Markets took fright, swap rates soared and UK gilt yields rose to become even more expensive than Italian debt. It was like Liz Truss all over again.

“Swap rates are now edging down slightly but remain very high. Not good news for a government swimming in debt.”

KEYCHAIN

Keychain is rolling out its digital platform for mortgage brokers and their clients with features including fact finding, document sharing, and e-signing of client care documents all paperless.

The company secured backing from the Land Registry as part of the Geovation accelerator programme, which supports firms focused on improving property transactions.

The programme features financial support of over £100k and access to Land Registry data. Keychain was founded by Jack Rogers, a former Bank of England economist, and Ivan Sivukha, an experienced software engineer.