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A record overnight drop in the choice of mortgage products has been recorded by a financial information website, as the economic fallout from Friday’s mini-budget continues. Moneyfacts.co.uk said 935 fewer residential mortgage products were on the market on Wednesday compared with Tuesday. This is the highest fall on Moneyfacts’ records going back to November 2011.
On BBC Question Time, an audience member detailed how she now cannot afford to buy.
She said: “I just want to know what the plan is for mortgages because I was actually in the process of getting a mortgage as a young person and I was told my initial interest rate would be 4.5 percent.
“I was told today that the lender has pulled that offer and now the best offer that I can get is about 10.5 percent.”
The audience could be heard gasping after her interest rate had more than doubled with others saying, “wow”.
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She continued: “They’re saying that you need to immediately look at putting your application through because if you don’t the lenders may even pull these offers.
“For me now as a first-time buyer, I don’t think I can afford to get a mortgage.
“I was given this initial rate about two weeks ago, we were in the process of getting all the documentation together and making sure everything was correct.
“Today I was told the lenders are pulling those offers.
“They just saying the lenders are pulling the offers, they haven’t said anything else.”
It comes as mortgages were branded a “ticking timebomb” awaits if UK interest rate rises follow market predictions, Martin Lewis has warned.
Speaking on ITV’s Good Morning Britain, the consumer champion suggested those with variable rate mortgages or fixed-rate deals coming to an end in the next three to five months could go on a comparison website to see what is currently available.
The MoneySavingExpert.com founder said: “Then check your existing company to see what it will give you and then mortgage brokers are worth their weight in gold right now.”
Mr Lewis said that, for some, there may be a logic to breaking their fixed deal, but he added: “It is not right for everyone – you want the mortgage broker to do those numbers.”
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There have been recent suggestions the Bank of England may need to raise interest rates to as high as 6 percent.
Mr Lewis said that scenario would be “catastrophic for mortgage holders”, highlighting the costs it could add to mortgages.
He continued: “Once you start applying (for a mortgage) you have to pass an affordability check.
“Clearly, many people will start failing affordability checks at that rate. So they’ll either be stuck on only their own company’s deals or going to a standard variable rate.”
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