Fleet Mortgages, Lendco and Platform are among a number of lenders withdrawing mortgage products in the face of rising swap rates.
In broker notes all three lenders have confirmed they will return with new repriced product ranges in the coming days.
Yesterday, the ONS released data showing that inflation had fallen to 8.7%, however, this decrease was less than expected and core inflation was also higher than expected – hitting a 30-year high.
As a result the UK is now factoring in a higher peak in Bank Rate with markets forecasting that it could reach 5.5%.
Following on from this gilt yields have therefore shot up this morning with the 2-year currently up 0.26% to 4.36% and the 5-year increasing by 0.19% to 4.17%. These increases follow several days of significant rises. Over the past month yields have increased by over 0.5%.
These increases are now being reflected in higher swap rates and hence fixed rate pricing.
Nick Mendes, mortgage technical manager at John Charcol, said: “We are starting to see the impact of the market reaction playing through to swaps as a result lenders are pulling deals to reprice.
“Based on current rates I doubt there will be any rates available significantly below 5% and so anyone waiting to see what happens to mortgage rates following the recent announcement should look to get their mortgage application underway.”
Sarah Coles, head of personal finance at Hargreaves Landsdown, added: “For those waiting and hoping for fixed mortgage rates to fall, there could be a lot more waiting and a lot less hope.
“Rising swaps rates mean fixed rate mortgages will be pushed higher in the short term.
“Meanwhile, concerns about the stickiness of inflation are likely to mean we won’t get Bank of England cuts this side of the New Year, so mortgage rates are unlikely to head south as fast as people were hoping. Anyone waiting it out on a variable rate, meanwhile, will be paying a higher price for longer.
“If you’re looking for a fixed rate mortgage right now, this is horrible timing, because the market is likely to be running hot in the short term. There is the hope that over time, this proves to be a spike, but there are no guarantees.
“It leaves you with the option of fixing at a higher rate than planned, opting for a variable rate in the hope fixes will come down, or holding off until the picture is clearer. None of these are ideal – and none are brilliant indicators for the property market either.”
