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September 27, 2022

UK banks withdraw mortgage products citing volatile markets

UK banks have started withdrawing and repricing mortgage products due to volatile financial markets, Bloomberg reported. 

In an emailed statement, Lloyds Banking Group said that its subsidiary Halifax is changing its mortgage product range due to significant changes in mortgage pricing.

“There is no change to product rates, and we continue to offer fee-free options for borrowers at all product terms and LTV levels, but we have temporarily removed products that come with a fee,” a Halifax spokesperson was quoted by the publication as saying. 

Virgin Money UK said it is temporarily pulling back home loan products for new customers due to the market turmoil. 

“Given market conditions, we have temporarily withdrawn Virgin Money mortgage products for new business customers,” a representative said in a statement. 

“Existing applications already submitted will be processed as normal and we will continue to offer our product transfer range for existing customers. We expect to launch a new product range later this week.”

Skipton Building Society spokesperson said it had temporarily withdrawn its mortgage products for so that it can reprice its offerings. 

Paragon, which is a specialist buy-to-let mortgage lender, has also halted some fixed rate products, the publication said. 

The move comes amid mounting concerns that the Bank of England (BoE) will have to increase rates to control the pound’s fall.  

Following Chancellor Kwasi Kwarteng’s fiscal announcement last week, the pound and UK government debt markets recorded a free fall. 

Meanwhile, the BoE has announced that it will be stress testing the UK banking system’s resilience “to deep simultaneous recessions in the UK and global economies, large falls in asset prices and higher global interest rates.”

For the first time, the central bank will include participating banks’ retail banking units in the tests on a stand-alone basis.  The participating entities are BarclaysHSBC, Lloyds Banking Group, NationwideNatWest GroupSantander UK, Standard Chartered and Virgin Money UK.

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