Banks and building societies pull a THIRD of all mortgage deals in just three weeks as worry over coronavirus grips the market
- There are 30 per cent fewer mortgages on offer then just three weeks ago
- Nationwide, Halifax and Barclays have all pulled higher loan-to-value deals
- Experts worry a lack of competition may mean mortgage rates will soon rise
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Nearly a third of all mortgage deals have been pulled from the market in just three weeks as the housing market grinds to a halt amid the coronavirus outbreak.
This morning there were some 3,654 total residential mortgage deals on offer from banks and building societies in the UK, according to finance experts Moneyfacts.
This is some 1,585 fewer than the 5,239 deals that were available on 11 March – a drop of 30 per cent.
This comes as lenders pull higher loan-to-value deals while buyers and sellers put their home moves on hold in the wake of the coronavirus.
There are some 1,585 fewer mortgages on offer than there were just three weeks ago
The housing market has been thrown into chaos in recent weeks as the Government urged buyers and sellers not to move home as the pandemic continues to spread.
This, on top of the recent Bank of England Base Rate cuts, has led to mortgage lenders pulling products in a move not seen since the credit crunch.
And it’s not just the smaller lenders that are pulling deals – Nationwide said it will temporarily stop offering all deals above 75 per cent loan-to-value.
This means a borrower will have to have a deposit worth 25 per cent of the property in order to qualify for a mortgage.
Barclays and Halifax’s intermediary brands have stopped selling mortgages above 60 per cent loan-to-value, while other lenders have stopped lending on deals which track the Base Rate directly.
It is not clear to what extent the banks have taken the decision due to staffing issues, with the country in lockdown and a wave of customers requesting mortgage holidays, or a concern that house prices could fall.
Banks and building societies will also be acting cautiously while they cannot send someone out to physically value a home.
While it’s too soon to tell, experts have warned that a decrease in competition among lenders as they pull deals from the market might lead to a price hike in future.
Eleanor Williams, finance expert at Moneyfacts said: ‘It is likely that competition between mortgage lenders for new mortgage business may take a step back during the foreseeable future, which we generally would expect to have an adverse effect on mortgage rates.
‘However, these are uncertain times and it is also likely that mortgage providers will need to protect their existing mortgage book, be seen as to be passing on the effects of a low Bank base rate and give their existing borrowers enough options to try and weather this storm going forward.’
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