LONDON (Reuters) – Some smaller British mortgage lenders temporarily withdrew and repriced products for new customers on Thursday, a consequence of a spike in British market interest rates following unexpectedly strong inflation data this week.
The moves had echoes of a more severe temporary shutdown of the mortgage market in late September and early October last year, sparked by investor reaction to former Prime Minister Liz Truss’s economic agenda, known as the “mini-budget”.
At least seven small lenders, mostly focused on the buy-to-let market, have pulled products or announced a repricing this week, according to mortgage brokers contacted by Reuters.
None of the major high street banks, which are better able to weather turbulent markets, have withdrawn or repriced products this week as a result of the market conditions, unlike last September.
Britain’s high inflation rate cooled by much less than expected in April, according to data published on Wednesday, prompting investors to ramp up bets on more Bank of England interest rate increases this year.
Government bond yields have soared, representing a sharp tightening of financial conditions in Britain which will be a concern to BoE officials.
Don't miss out on any breaking news or insightful opinions!
Subscribe to our free newsletter and stay updated on the go!
By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.
The two-year British swap rate, which underpins mortgage pricing for two-year deals, has shot up some 51 basis points so far this week.
If sustained into Friday, it would mark the biggest weekly jump since September 1989, excluding the period around the mini-budget.
Mortgage lenders regularly reprice products in response to conditions in their funding markets, although it is relatively rare to temporarily withdraw or reprice en masse.
(Reporting by Andy Bruce; Editing by William Schomberg)
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.