Mortgage deals from some lenders have been withdrawn in response to the current economic uncertainty, leaving less choice for borrowers. Find out what this means for you.
You may have heard that Virgin Money, Bank of Ireland and Skipton Building Society temporarily removed mortgage products for new customers last night, Halifax withdrew some of their products, and Accord and Santander have followed suit with similar temporary withdrawals today.
These lenders made their decisions to withdraw products after the pound plunged against the dollar following the Chancellor’s mini budget on Friday. A spokesman for Virgin Money said its decision to halt mortgage deals for new customers was made due to market conditions.
Some lenders have become more cautious as the plans announced in the mini-budget will mean government borrowing will increase significantly, as investors are concerned about how the country will meet this new debt. In turn, the cost of borrowing to lenders, from which they fund their lending, has also increased.
Are other lenders likely to follow suit? And why is this happening?
‘The lenders that have chosen to temporarily withdraw their products are doing so because they want to sit and wait to see how the markets unravel before they commit to lending,’ says MB Associates’ Sales Manager, Phil Leivesley. ‘If the turbulence ends as quickly as it began, then we can expect them back into the market soon.’
If you have a mortgage offer in writing from a lender
It’s important not to panic. All of the lenders who have temporarily withdrawn products have said that submitted applications will still be processed.
If your lender has issued a formal mortgage offer, your rate should be secure. While a lender can technically withdraw a rate after the submission of an application and before the offer has been issued, it’s highly unlikely this will happen.
If you have spoken to a broker or lender and are considering your options
Don’t delay. Gather together the paperwork needed for your mortgage application if you want to proceed – that’s three months’ worth of bank statements and payslips if you’re employed or your most recent two years’ worth of company accounts and HMRC tax calculations if you’re self-employed. You’ll also need proof of your deposit in writing. Make sure your broker has everything they need from you so that they can act swiftly on your behalf.
If you are coming to the end of a fixed-rate deal in the next six months
Again, act swiftly. Gather your paperwork together and have a conversation with your broker now. The more time they have to act on your behalf, the better. We’re here to help if you need advice.