MAJOR mortgage lenders have pulled their fixed deals after the value of the pound against the dollar collapsed to $1.03 yesterday.
Several lenders including Halifax, Virgin Money and Skipton Building Society have pulled fixed deals for new customers.
A handful of smaller lenders have also pulled their fixed mortgage deals
But HSBC told HOAR that the bank has “no current plans to withdraw mortgages.”
Sterling hit a record low against the dollar – the lowest since decimalisation in 1971.
The value of the pound fell by more than 4% to just $1.03 in early trading in Asia, before recovering to $1.09 yesterday afternoon.
It promoted the Bank of England to say it “won’t hesitate to change interest rates”.
A raft of tax cuts unveiled on Friday last week have prompted the fall and growing concerns for the impact on inflation.
The Bank of England already increased interest rates by another half percentage point to 2.25% last Thursday.
But the pound steadied in early trading in Asian markets on Tuesday as it recovered ground slightly from the record low of 1.0327 against the US dollar it struck early on Monday morning after traders were spooked by the Government’s economic plans.
Sterling sat around around 1.08 dollars by 7am on Tuesday, but economists have warned it could still fall to parity with the dollar this year for the first time.
The string of Bank of England base rate increases which have already taken place in recent months mean that a tracker mortgage is now about £210 per month more expensive, on average.
That’s compared to how much homeowers were paying before the rate increases started last December, rising from historic lows.
A standard variable rate (SVR) mortgage is now about £132 more expensive per month, according to the figures from UK Finance.
While the majority of mortgage holders are on fixed-rate deals, 1.8 million fixed deals are scheduled to end next year – meaning some homeowners could be in for a bill shock when they do eventually come to take out a new mortgage.
Borrowers are rushing to lock in fixed deals as early as possible to avoid future rate hikes.
But we list the major lenders who have already pulled their fixed mortgages deals below.
Halifax, the UK’s biggest lender for mortgages said it has temporarily withdrawn mortgage products that come with fees.
The bank said it has withdrawn all products that come with a fee “as a result of significant changes in the cost of funding”.
A spokesperson for Halifax, which is part of the Lloyds Banking Group, said: “As a result of significant changes in the cost of funding, we’re making some changes to our product range.”
“There is no change to product rates, and we continue to offer fee-free options for borrowers at all product terms and LTV levels, but we’ve temporarily removed products that come with a fee.”
Virgin Money has also pulled its fixed mortgage deals to all new customers.
Virgin Money said its withdrawal of mortgage products for new customers would took place yesterday evening (August 26) at 7pm.
A spokesperson for the bank said: “We continue to monitor the situation closely and currently plan to relaunch products for new customers towards the end of the week.”
Skipton Building Society
Skipton Building Society temporarily withdrew their mortgage ranges for new customers because of the volatility in sterling funding markets.
“Following last week’s (Bank of England) meeting and the government’s subsequent Mini Budget we continue to see the market response unfold,” Skipton Building Society said in an email to brokers.
“In response, we will be temporarily withdrawing our New Business Product Range with immediate effect.”
The FT Advisor has also reported that smaller lenders including Scottish Building Society, Darlington, and Legal & General’s buy-to-let arm CHL Mortgages have withdrawn all their fixed rate mortgages.
Clydesdale Bank, Paragon, Leek United Building Society and The Nottingham for Intermediaries are also understood to have pulled fixed mortgages for new customers.