40% of mortgage deals pulled since mini-budget; financial markets in turmoil – business


Mortgage chaos: 41% of deals pulled since mini-budget

Forty-one per cent of mortgage products have been taken off the market since Kwasi Kwarteng’s mini-budget last Friday, which sparked panic in financial markets, and expectations of a jump in the Bank of England’s base rate to 6% by next summer.

A further 321 products were withdrawn overnight, on top of the record 935 pulled the day before, according to Moneyfacts.

Between Friday and today a total of 1,621 residential mortgage products have been withdrawn leaving 2,340 on sale today.

According to Defaqto, more than 20 providers have withdrawn their entire fixed rate mortgage range.

Katie Brain of Defaqto says:

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.

Consumer finance expert Martin Lewis has tweeted:

For every £100,000 of mortgage, you'll pay roughly £600 a year more for each 1% pt interest rate rise.

Top fixes today are 3%ish more than a year ago (so £1,800 per £100,000).

If UK rates rise to 6%, as some predict mortgages'd likely rise more than another 3% again

BUT…

— Martin Lewis (@MartinSLewis) September 28, 2022

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For every £100,000 of mortgage, you’ll pay roughly £600 a year more for each 1% pt interest rate rise.

Top fixes today are 3%ish more than a year ago (so £1,800 per £100,000).

If UK rates rise to 6%, as some predict mortgages’d likely rise more than another 3% again

BUT…

— Martin Lewis (@MartinSLewis) September 28, 2022

That assumes people will be accepted for the top fixes.

At those rates of interest though many more will likely fail the affordability checks – which means likely sticking with their own lenders (poss costlier) fix or moving onto standard variable rates, which are even higher.

— Martin Lewis (@MartinSLewis) September 28, 2022

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That assumes people will be accepted for the top fixes.

At those rates of interest though many more will likely fail the affordability checks – which means likely sticking with their own lenders (poss costlier) fix or moving onto standard variable rates, which are even higher.

— Martin Lewis (@MartinSLewis) September 28, 2022

Liz Truss was asked about mortgages this morning.

An awkward moment.

BBC Stoke’s @johnacres48 asks Liz Truss about mortgages dwarfing any savings her govt may have made people.

“You’ve done this yourself. This isn’t to do with external forces. This is about your mini budget and what it’s done to the economy”.

Truss: “…….” https://t.co/xiw7nRSsCC

— Pippa Crerar (@PippaCrerar) September 29, 2022

n”,”url”:”https://twitter.com/PippaCrerar/status/1575403248026017794″,”id”:”1575403248026017794″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”b6371916-908b-4103-8e2c-861055e038eb”}}”

An awkward moment.

BBC Stoke’s @johnacres48 asks Liz Truss about mortgages dwarfing any savings her govt may have made people.

“You’ve done this yourself. This isn’t to do with external forces. This is about your mini budget and what it’s done to the economy”.

Truss: “…….” https://t.co/xiw7nRSsCC

— Pippa Crerar (@PippaCrerar) September 29, 2022

As a reminder:

Liz Truss, 25 July 2022, when warned by Rishi Sunak that her plans would make inflation worse and mortgage rates soar and lose them the next election:

‘I don’t believe in this negative, declinist language’

‘I have lots of economists that are backing my plans’ pic.twitter.com/pzSFYJoGbo

— Nadine Batchelor-Hunt (@nadinebh_) September 27, 2022

n”,”url”:”https://twitter.com/nadinebh_/status/1574891426860736514″,”id”:”1574891426860736514″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”121e3a5a-88e5-4aeb-80de-492ce6eb14de”}}”

Liz Truss, 25 July 2022, when warned by Rishi Sunak that her plans would make inflation worse and mortgage rates soar and lose them the next election:

‘I don’t believe in this negative, declinist language’

‘I have lots of economists that are backing my plans’ pic.twitter.com/pzSFYJoGbo

— Nadine Batchelor-Hunt (@nadinebh_) September 27, 2022

Sir Martin Sorrell, founder and chairman of the media company S4 Capital, has predicted a “bathtub” shaped recession for the UK, with two difficult years in 2023 and 2024.

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While he broadly welcomed the government’s growth strategy, he said the timing was wrong. He added that the corporation tax change (rather than rising to 25% from April 2023, the rate will remain at 19% for all firms) will not encourage investment, as long as there is heightened uncertainty over the UK’s future.

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He told Sarah Montague on BBC radio 4’s World at One:

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n

I don’t think rates of tax necessarily determine whether people invest, it’s certainty or uncertainty that makes you invest and the environment partly as a result of his statement on Friday and what he said over the weekend that there might be other unfunded tax reductions… has created even greater uncertainty. The issue of uncertainty is the real issue. Businesses will gust go on strike, they won’t invest until they see some clarity and we’re not going to get clarity for the next few weeks: no parliament, the Conservative party conference coming up…

n

This is just like the CEO and the CFO of a company coming up and saying: my revenue’s down, my costs are up and I have no specific plan for dealing with it, just leaving the shareholders in limbo. Unfortunately the shareholders only vote at times of elections so we have to wait for two years to see what the result of this is.

n

There will be falls in employment [in part] as a result of this [the mini-budget].

n

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Asked about the likely shape of the recession, Sorrell said:

“,”elementId”:”43f7c9d6-f134-45c7-aaa0-d51af608e789″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

This is a bathtub [recession]. What we’re going to see 2023 and 2024 are difficult.

n

“,”elementId”:”2c226b4d-290b-4b3f-a1bf-6d3f0c92dbfd”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

(Simon Johnson, former chief economist for the International Monetary Fund, has said that a U-shaped recession is like a bathtub: “You go in. You stay in. The sides are slippery. You know, maybe there’s some bumpy stuff in the bottom, but you don’t come out of the bathtub for a long time.”)

“,”elementId”:”d260642b-5642-4347-9eb0-81fcf23e08c9″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Sorrell went on to explain:

“,”elementId”:”512c8dc2-c91e-4f44-9ac0-fd38bc3c53c1″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

We’re in a difficult place. I don’t think we’ll see a recovery until the US presidential election in 2024. What I think the government has done here is gamble politically that by the general election in the UK in 2024 there will be some growth and that will bail them out. That is a heck of a gamble, particularly if you don’t have a fiscal plan.

n

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