Banks withdraw over 900 mortgages in a week: can you still get a good rate when remortgaging?
Banks and building societies have withdrawn a lot more than 900 mortgages since the Bank of England cut the bottom rate to 0.1% last week.
In the last eight days, the number of available deals has fallen from 5,697 to 4,761 – a drop of 16% – with tracker mortgages the largest casualty.
Here, Which? explains what these cuts mean for homeowners because of remortgage and first-time buyers hoping to secure a loan later this season.
Lenders cut deals amid coronavirus outbreak
Lenders have dramatically cut the number of mortgage deals they offer in the wake from the coronavirus outbreak.
Earlier now, Barclays and Halifax both announced these were withdrawing their broker-only ranges, also it seems other lenders have followed suit.
Since last week’s emergency base rate reduction, 936 mortgages have been withdrawn in the market, as shown in the graph below.
Which deals are being withdrawn?
Though there has been withdrawals right overall, the biggest drop has developed in the quantity of tracker mortgages, that has fallen by 47%, from 306 to 163 in eight days.
Why are banks withdrawing deals?
A range of circumstances associated with the coronavirus outbreak has resulted in lenders pulling their deals.
First of, many banks are overwhelmed by calls from homeowners looking to go ahead and take three-month mortgage payment holiday provided by the government, and are directing their limited resources towards these customers.
Secondly, most of the withdrawn deals are for buyers with smaller deposits. This means lenders are shying away from ‘riskier’ mortgages due to uncertainty about what will happen to the value of homes throughout a period where few transactions are going through, as well as the logistical problems with conducting valuation surveys during a lockdown.
Finally, the financial institution of England’s decision to chop the base rate for an historic low was always prone to impact on the number of tracker mortgages – which stick to the base rate plus a specific percentage.
Can I still remortgage?
The property marketplace is set to grind to some halt for some time, but existing homeowners will still need to switch deals after their fixed terms.
The great news is that it’s still easy to switch your mortgage, though you might need to be patient as banks are facing huge demand right now.
Fortunately, the very best rates are still available. The amount of two-year fixes has came by 24% per week and also the quantity of five-year deals has fallen by 15%, but the cheapest rates are largely exactly the same, as shown within the chart below.
How will first-time buyers suffer?
In a time period of uncertainty, banks are likely to withdraw the things they say is ‘riskier’ products, for example mortgages for first-time buyers with small deposits.
And that’s certainly been the situation within the last week. Since the base rate fell, lenders have withdrawn 18% of the 90% mortgages and 24% of the 95% mortgages.
Again, it’s important not to panic, because there are still plenty of cheap deal.
Mortgage offers generally continue for six months so you can still apply for a contract in principle and secure a good rate now, but in the current climate, it may be ideal to hold back it for a while and find out what happens towards the market over the next couple of months.
Help for existing mortgage holders
In the final couple of weeks, the government features a series of policies to help people with their mortgages if they’ll suffer financial loss because of the coronavirus outbreak.
Last week, it announced that homeowners and landlords can apply for a three-month mortgage payment holiday if their income is going to be affected. You can find out the way the payment holiday works and how to apply in our full guide.
And the 2009 week it had been announced that individuals while buying a house can usually benefit from a three-month extension of their mortgage offer if they need to delay their completion date. You will get the full details in our guide on moving home throughout the lockdown.
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