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UK lenders pull mortgages at record rate as market chaos worsens

by News Desk
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LONDON (Reuters) – Financial services provider Moneyfacts on Wednesday saw a record 935 homes in Britain as turmoil in financial markets deepened and more lenders temporarily withdrew products for new customers. Said the loan product was withdrawn overnight.

The volatility came after Britain’s new government announced huge tax cuts on borrowed money, raising concerns about its ability to fund the plan, leading to a plunge in the pound and a surge in bond yields.read more

Government bond yields affect the cost a lender must pay to borrow money.

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“It’s very difficult for[lenders]to know where to price a mortgage because they don’t know where it’s going, how high it’s going to go, or where it’s going to stop,” says Ray Boulger, a mortgage expert. Broker John Charcol told BBC Radio it would have a big impact on the housing market.

“I think you can expect house prices to drop significantly, probably around 10% next year,” he said.

crash system

The 935 figure is more than double the previous record of 462 when lockdowns began due to the pandemic, according to Moneyfacts, which monitors UK mortgages, savings, loans and investment products.

“The headlines around interest rates soaring to 6% have alarmed both lenders and borrowers, and lenders across the market are slashing interest rates,” said Karen Neue, a mortgage expert at wealth management firm Quilter. I see it,” he said.

Virgin Money and Skipton Building Society temporarily withdrew all ranges at some point this week, according to emails sent to brokers seen by Reuters.

The bond market crisis deepened on Wednesday, when the Bank of England stepped in and said it would buy as many government bonds as needed to restore financial stability.

Finance Minister Kwasi Kwarteng’s plan drew criticism from the International Monetary Fund, which said the proposal would aggravate the credit crisis.

Quilter’s Noye said, “Lender systems are crashing with long virtual queues of borrowers and advisors trying to get lenders and clients deals at current rates.”

“Rates that were available one hour are gone the next, making it a difficult time for buyers.”

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Reporting by Muvija M and Paul Sandle Editing by Mark Potter

Our criteria: Thomson Reuters Trust Principles.

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