New buyers warned to ‘take a step back’ amid mortgage ‘uncertainty’

Martin Lewis brands the mortgage market 'perverse'

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The recent Nationwide Property Index report indicated that house price growth flatlined in September. And it’s only expected to stall further, as the Bank of England warns of further interest rate rises within the next few months to protect the plummeting pound and stem inflation rates. New buyers are being warned to ‘take a step back’ while uncertainty prevails.

Banks and building societies have withdrawn a record number of mortgage deals since the start of the week, when news that the pound’s value dropped to an all-time low sparked fresh fears of high BoE interest rates.

Abby Birch, financial coach at Claro Wellbeing told “With market volatility and interest rate speculation, the rates at which banks can borrow money have also seen increased volatility over the past few days.

“This means some lenders have taken the decision to review or pause their mortgage offerings as the rates they could borrow last week are no longer available.”

Reports suggest up to 3,000 deals have been pulled since Monday, with some lenders, such as Skipton Building society, withdrawing its offer to new customers completely.

Katie Brain, consumer banking expert at Defaqto said: “Within the space of a week we have seen some dramatic changes within the mortgage market. Nearly 3,000 mortgage products have been withdrawn, and over 20 providers have withdrawn their entire fixed rate mortgage range. 

“What products are left are changing at a rapid pace, lenders seem to be really unsure of what to offer and what price with so many changes in the money markets at the moment.”

Commenting on the crisis, Anthony Codling, CEO of property platform Twindig said: “We have entered a period of extreme uncertainty in the mortgage market, with several lending temporarily ceasing to offer mortgages to new customers and most lenders significantly reducing the number of mortgages on offer.

“The mortgage rates available in August are unlikely to be readily available for a long time.”

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While the Chancellor’s decision to slash Stamp Duty thresholds would have been much welcomed news to first-time buyers last week, the chaos that’s unfolded this week “will do little to allay fears about the future of the housing market”, according to personal finance analyst Alice Haine.

Ms Haine from Bestinvest said: “While the taxation cost associated with buying a home may be reduced by the stamp duty changes, buyers must still contend with much higher mortgage rates than they were a year ago and the new issue of being able to source a mortgage at all.

“The risk now is that the market gets flooded with sellers as homeowners, fearful they cannot afford higher mortgage repayments coming down the line, make a last-ditch to sell before the base rate rises again – as it is expected to do so next month.

“For buyers considering entering the market right now, it might be wise to take a step back for a week or so to let the market absorb the events of the last few days and give banks and building societies time to relaunch new products.

“The chaos in the sector is fast moving and how far house prices will fall from here is a guessing game at this highly volatile juncture.

“But mortgage panic has swept the market amid warnings of a 15 or even 20 percent fall in property prices.

“Any decision to buy must now be considered very carefully to ensure budgets can absorb much higher mortgage repayments.

“The best advice for those determined to push ahead is to get all your paperwork in order. Deals are appearing and disappearing very quickly so you must be nimble to secure a deal.

“While the best strategy is to lock in a new mortgage deal now before rates increase further as the offer will remain valid for up to six months, the difficulty in the near term is securing an offer at all.”

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