Mortgage lenders halt some deals after pound falls
Following Monday's volatility, financial markets updated predictions and said interest rates could now more than double by next spring to 5.8%, from their current level of 2.25%, to curb inflation - the rate at which prices for consumers rise.
"And of course the second thing is banks and building societies have to be able to make a margin and so they have to price that increased financial market view of the interest rates into their products, and that's why you're seeing [mortgage] rates start to really go up quite fast over the past two to three months."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said if interest rates rise as predicted, the average household refinancing a two-year fixed rate mortgage in the first half of next year would see monthly payments jump to £1,490 from £863.Virgin Money confirmed a decision to halt deals for new customers was due to the market conditions.
Halifax said from Wednesday it would remove mortgage products that come with a fee "as a result of significant changes in mortgage market pricing we've seen over recent weeks". Halifax said it had not changed its mortgage rates and it continued to offer product fee-free options for borrowers.
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