A MORTGAGE adviser has accused the government of “reckless” announcements affecting millions of people who can barely afford a rise in interest rates.
Lenders have been withdrawing some of their mortgages after the sharp loss of confidence in the pound led the Bank of England to say it would “not hesitate” to raise rates if necessary.
Virgin Money and Skipton Building Society halted mortgage offers for new customers, although they will continue to process applications already submitted. Halifax said it would stop mortgages with product fees.
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Stuart Gregory, managing director of Lentune Mortgage Consultancy in Brockenhurst, said: “We have seen several major high street lenders and some smaller Building Societies either give short-notice of the removal of their products, with a re-pricing upwards expected.
“When the cost of borrowing on the money markets increases, this puts pressure on lenders, which is why we are seeing these interest rate removals. Inaction doesn't help - and the reckless announcements of a fresh government are, frankly, irresponsible as it affects millions of people in the UK who can barely afford these changes."
Mortgage advisers were reporting on Monday that some lenders had given them less than two hours’ notice that they needed to submit full applications from borrowers to secure rates.
The pound has plunged against the dollar and other currencies in the wake of chancellor Kwasi Kwarteng’s announcement of a £45billion package of tax cuts funded by borrowing.
The pound stabilised at 1.08 US dollars overnight on Monday.
The chancellor said on Monday he would bring forward an announcement of a “medium-term fiscal plan” to start bringing down debt levels.
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The Treasury said it would now be published on November 23, having previously been slated for the new year, and would include further details on the government’s fiscal rules, including ensuring that debt falls as a share of GDP in the medium term.
At one point, it was thought that the Bank of England would be forced to step in with an emergency interest rate hike amid fears the pound could drop to parity with the dollar.
However, governor Andrew Bailey said the monetary policy committee, which sets interest rates, would make a full assessment of the impact on inflation and the fall in sterling at its next scheduled meeting in November and then “act accordingly”.
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