Black Monday in the mortgage market
Michelle Slade, analyst at Moneyfacts.co.uk, comments:
“Monday saw one of the largest declines in mortgage products ever seen in a day, with 11.4% of products being culled. At the start of Monday there were 3,914 mortgage products on the market, today there are just 3,469.
|
Product Numbers 29/09/08 |
Product Numbers 30/09/08 |
Residential Mortgages |
3,252 |
2,988 |
Buy-to-Let |
662 |
481 |
Total |
3,914 |
3,469 |
Source: Moneyfacts.co.uk |
||
"The buy-to-let sector has been hardest hit since the turmoil began with 85% of products being withdrawn in a year, but residential mortgages are not far behind with a loss of 60% of products.
“Bradford & Bingley and Mortgage Express pulled their entire range, along with UCB Home Loans and The Mortgage Works, which have temporarily withdrawn their products due to unprecedented business volumes.
“Halifax, Bank of Scotland Mortgages, Bristol & West Mortgages, Intelligent Finance and Newcastle BS have also restricted the range of products that they now have on offer.
“This news will be another blow for mortgage borrowers, as not only do they now have a more restricted choice, but the insecurity in the money markets has caused many lenders to increase their mortgage rates.
“If more lenders decide to take the same stance and withdraw their range on a temporary basis, it is likely to cause a bottleneck for the remaining lenders.
“As the pressure on these lenders increases, service is likely to suffer. As a result we may see further lenders being forced temporarily to withdraw their range.
“Coupled with the liquidity problems in the markets, it may be that we see further increases with this phenomenon in other aspects of lending, such as loans and overdraft rates.
“It appears that lenders are slowly turning the tap off on the number of mortgage products available and their appetite to lend. If the problems continue we have to start asking the question, will the tap will be turned off completely until stable markets return?”
Moneyfacts Group
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