Mortgage Deals Pulled Amid House Price Fall Predictions
A number of lenders have withdrawn mortgage deals to new customers after the Bank of England said it would take action to combat a fall in the pound.
Following chancellor Kwasi Kwarteng’s mini budget, in which he announced tax cuts and increased government borrowing, the pound fell to record lows. This prompted the Bank of England to say it would not hesitate to raise interest rates and that “a significant monetary policy response” would be necessary.
Economists have predicted that interest rates will hit 5.8% by April 2023. This could make remortgaging or buying a house more difficult for many.
Fewer mortgages available
There are now fewer mortgages available for homeowners. The financial product comparison site Moneyfacts said that this morning (28 September), 2,661 residential mortgages were available. On Friday morning, before the mini budget was announced, there were 3,961.
Among the mortgage providers that have suspended new deals are:
- HSBC
- Post Office
- Santander
- Virgin Money
- Yorkshire Building Society
House prices predicted to fall
As well as removing mortgages from the market, lenders have started to increase the cost of borrowing. This could see homeowners paying hundreds of pounds more per month.
Analysts have predicted that house prices will fall as a result of the increase in interest rates.
Mortgage broker Jon Charcol spokesperson Ray Boulger told BBC Radio 4 that the prospect of interest rates reaching 6% next year makes it difficult to price mortgage deals.
That could lead to a drop in house prices of 10%, he said.
Stamp Duty cut
This follows the chancellor’s cut to Stamp Duty in England and Northern Ireland.
In his mini budget, the chancellor announced that there would be no Stamp Duty to pay on homes costing up to £250,000.
On homes costing between £250,001 and £925,000, buyers will pay 5% in Stamp Duty. It will cost 10% on properties up to £1.5 million and 12% on those over that value.
First-time buyers won’t pay Stamp Duty on a property up to £425,000.
With the uncertainty around mortgages and buying a home, having the right legal team on your side could make things more straightforward. To find out how our expert conveyancers could help you, just give us a call or enquire online.
