Mortgages geared toward first-time buyers have fallen thick and fast off the market throughout June, as lenders squabble to change deals ahead of a further interest rate hike.
Come last weekend, 40% of 95% loan-to-value mortgages had disappeared from the market since the start of June, according to Moneyfacts, as just 199 of an original 347 products remained.
UK banks, including the likes of Lloyds Banking Group PLC (LSE:LLOY), NatWest Group PLC (LSE:NWG) and HSBC Holdings PLC (LSE:HSBA), have all toyed with mortgage offerings in recent weeks, as anticipation grows of a thirteenth consecutive Bank of England interest rate hike on Thursday.
This has been “something of a hokey-cokey in the mortgage marketplace,” interactive investor analyst Myron Jobson Commented.
“Lenders [have been] pulling deals shortly after launching them after being swamped by applications from borrowers rushing to refinance before rates rise even higher,” he explained.
Persisting inflation and 15-year high gilt yields have fuelled expectations that base UK interest will rise once again later this week from a current 4.5%.
This prompted average two-year fixed mortgage rates to jump above the 6% mark on Monday, as TSB Banking Group (LSE:TSB) became the latest to pull deals from the market.
Concerns have also been growing that interest rate hikes on mortgage deals are not coinciding with increases in savings account offerings, likely benefitting banks.
“There is a sense that the same amount of energy that has gone into upping the cost of mortgages has not been exerted when it comes to upping savings rates,” Jobson continued.
“It has taken some savings providers months to pass on higher rates to savers,” he added, but this has gradually started to change “thanks to intense scrutiny” from regulators and politicians.