Mortgage lenders have pulled 935 products since yesterday as many struggle to re-price interest rates amidst short-term market uncertainty.
This figure is the highest daily fall in residential mortgage products recorded since 2011, when Moneyfacts' data began.
It is also more than double the previous record fall of 462 products, which happened on April 1, 2020 - a week after the Covid-19 lockdowns began.
Compared to yesterday, when there were 3,596 products, today there are 2,661.
At least 30 lenders have pulled products since Friday (September 23), following the government’s tax cuts announcement, a subsequent crash of the pound and a volatile swap rate market. These include some of the UK's largest lenders, such as Barclays, Santander, Halifax and HSBC.
Lenders who were still fully operating in the market this morning reached capacity just hours into the day.
At 10:02am, Barclays emailed brokers saying: “Please be advised that as a result of the significantly increased demand we are currently experiencing, we have just reached our daily booking limit for today, Wednesday 28 September.
“This means if your application doesn’t already have a booking, you will receive an error message within our application system and you will be unable to proceed with submission until the booking limit has been refreshed overnight tonight.”
The bank has now withdrawn some products from its existing residential purchase and remortgage ranges. The Mortgage Works has also pulled all its fixed rates today, and Leeds Building Society has pulled all but two new mortgage deals.
Meanwhile, the Bank of England has said it is taking action to avoid “material risk to UK financial stability”. It confirmed today (September 28) that it will purchase long-dated UK government bonds to prop up the gilt market and “restore orderly market conditions”.
We’re now having to act like we’re Jordan Belfort, trying to predict economic markets. It’s a shady place to be. Brokers are not set up for that.Lewis Shaw, Shaw Financial ServicesChanges to the gilt market tend to impact swap rates, which lenders use to guide their mortgage pricing decisions.
Currently, SONIA swaps sit at 5.512 per cent for two years, and 5.150 per cent for five years. In just one day, the former rate has climbed 0.149 percentage points, whilst the latter has climbed an even greater 0.27 percentage points.
“The worst thing about this is there isn’t a liquidity crisis, it’s that no-one knows how to price mortgages anymore,” said Mansfield-based broker Lewis Shaw.
“The real danger lies in whether you give your clients advice or if you don’t. If you say ‘sit tight’, what if things don’t calm down? It’s a catch 22.
“I don’t want to recommend someone to take out a mortgage now if rates are going to go down. How bad will I look if I put a first-time buyer on a 6 per cent mortgage and next month it’s back down to 3.5 per cent?”
Today, Nationwide launched first-time buyer rates of 5.69 per cent with a product fee, and 5.99 per cent without one.
As for lenders still in the market with competitive rates, Shaw said it’s hard to know whether to wait for them to open for business again tomorrow, or whether to look at rates lower down the list.
With Barclays already having met its booking limit for the day, Shaw said: “What do brokers do? Should we hold our nerve and hope Barclays doesn’t pull their rates too, or go down the list? It’s a ‘do I pull the trigger or don’t I?
“We’re now having to act like we’re Jordan Belfort, trying to predict economic markets. It’s a shady place to be. Brokers are not set up for that.
“I just want there to be some adults in the room who say ‘we can’t do this’.”
‘Massive misconceptions’ of what’s happening
Some brokers are finding clients and consumers online have “massive misconceptions” around what is actually happening in the market.
“Lenders are not pulling formal mortgage offers. Anyone already with a submitted application will still get that rate. They’re not revoking offers unless your circumstances change substantially, or due to fraud - which is what happens in normal times,” said Nottingham-based adviser at Harmony Financial Services, Imran Hussain.
“There's a massive misconception that lenders don’t want to lend. Right now it’s not a funding problem, it’s a pricing problem. It’s not like 2008.”
Hussain said his gut feeling is some lenders will ride out next five to 10 days to see what happens with swap rates and price accordingly.
“What we don't want is a deal on the market costing 4 or 4.5 per cent for the lender to buy and put on the market for the same price. We don’t want lenders to make a loss,” he said.“It does not help the market if products are only available for an hour at a time and then removed.
“I’d rather have lenders return imminently with products which they can commit to.”
ruby.hinchliffe@ft.com
