Many homeowners across the country may be worried about their mortgage repayments following the Prime Minister and the Chancellor's mini-budget on Friday (September 23).
The tax-cutting measures proposed by Liz Truss and Kwasi Kwarteng, which tanked the value of the pound, has led to turmoil on the markets. Lenders have been withdrawing mortgage products from sale and pricing deals upwards in response to current conditions.
The choice of mortgage products is continuing to shrink, according to Moneyfacts.co.uk. Some 2,340 mortgage products were on sale on Thursday – down from 2,661 on Wednesday, after the choice fell by a record 935 products between Tuesday and Wednesday.
On Friday, the day of the mini-budget, 3,961 products were available – meaning residential mortgage product choice has shrunk by 1,621 deals since last Friday. Brokers have said they expect lenders to return with new deals in the coming days.
Meanwhile, the Bank of England has been facing calls to convene an emergency meeting to consider hiking interest rates to try and counter the government’s tax cut measures. But mortgage payments could rise by another £100 a month if the Bank Rate is increased by a further 0.75 percent.
The move would put mortgage rates beyond 6 percent in the first half of 2023.
Calculate how much you could be spending on mortgage repayments with the predicted interest increase below...
Rachel Springall, a finance expert at Moneyfacts.co.uk said: “Borrowers would be wise to keep calm over the current volatility in the mortgage market and seek the advice from an independent broker.
“Various lenders have been very vocal that their decision to withdraw products is a temporary measure, amid the uncertainty over interest rates.
“Borrowers who are currently locked into a fixed rate may be better off coming out of their deal early to refinance before rates climb higher, but this entirely depends on their current situation and the costs to do so.
“Those looking to remortgage may find they have more equity in their home amid rising house prices, but first-time buyers may be struggling to find a property they can afford.”
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